Panama company formation and the employment route

How a Panama corporation (S.A.) works. The sociedad anónima is Panama's standard vehicle for holding and international business, governed by Law 32 of 1927. It needs at least three directors and three officers (president, secretary and treasurer), of any nationality and living anywhere; one person can hold several offices. A single shareholder is enough, and there is no minimum paid-up capital.

The Public Registry shows the directors, officers and resident agent, but not the shareholders. Owners who prefer not to appear on the public record can use nominee directors and officers supplied by the law firm, while ownership and control stay with them through the share register and a written nominee agreement.

Privacy now stops at the regulator. Every company must appoint a resident agent, a licensed Panamanian lawyer or law firm, which collects due diligence on owners and directors and reports every beneficial owner holding 25% or more to a private registry run by the Superintendency of Non-Financial Entities under Law 129 of 2020. Bearer shares can no longer circulate freely: they must be held by an authorised custodian. Companies must also keep accounting records, under Law 52 of 2016.

S.A., S. de R.L. or foundation. The S.A. suits holding, trading and international structures. The S. de R.L. is Panama's LLC equivalent, run by managers, and suits a single operating business. A private interest foundation has no owners and is used for estate planning and to hold an S.A.'s shares for a family. Many clients combine them: a foundation owns the S.A., the S.A. holds the assets or trades.

What it is used for. Holding companies above operating companies elsewhere; trading and service businesses with clients outside Panama, whose profits are foreign-source; holding Panamanian property, which can also qualify for Friendly Nations residence; and the employment route described below.

The company can also anchor residence. Under the Friendly Nations employment option, a national of a listed country is hired by a Panamanian company, and that company can be their own. Since the 2021 reform, simply owning or being a shareholder of a company is not enough on its own: the company needs its Business License (Aviso de Operación), a Public Registry certificate and an employment letter on its letterhead naming the applicant.

The applicant first receives two years of provisional residence, then applies for permanent residence 30 days before it expires. The company must stay active and in good standing throughout: franchise tax, municipal tax, accounting and annual returns. A work permit from the Ministry of Labour and registration with social security are separate steps, and only needed if the applicant will actually work in Panama.

From 2027, companies in larger international groups that earn passive income from abroad must show real activity in Panama. A stand-alone company owned by one person is generally not affected.

Redomiciled coordinates incorporation, the Business License and the residence file with licensed Panamanian attorneys, and introduces a Panamanian public accountant for the filings.