Panama Trust Law and Panama Corporation Advantages / Improvements.

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Panama Trust Law and Panama Corporation Advantages / Improvements.

The executive branch of Panama has enacted decree 5 of 1997. This contains the necessary changes to the Commercial Code and Law 1 of 1984 on Panama’s trust. These changes were made so that Panama can encourage a more beneficial growth of the rapidly burgeoning financial industry in the country.

The new legislation provides the following advantages to clients:

a) Improve documentation on pertinent records for business associations who are operating locally in Panama;
b) Enable more flexibility on procedures and documentation for companies and trusts in Panama;
c) And update provisions in stock brokerage and pledges.

Some of the new provisions are:

1. Provisions are added to Article 11 regarding the commercial code for redomiciliation. Foreign corporations are also required to submit these documents if they wish to be licensed under Panama’s Law: Certification of good standing from the original jurisdiction; Minutes of the meeting which proves they agree with the redomiciliation; and amendments of the articles of incorporation corresponding with Panama’s Law. Once the documents have been submitted and recorded, the corporation may continue to operate under the laws of Panama.

2. Corporations in Panama are not allowed to operate under the laws of a foreign country and redomiciliate overseas if they owe corporate franchise taxes.

3. Through a lawyer in Panama, a corporation can reserve a name for 30 days when the public registry verifies its availability. The fee costs $25.00. The corporation can also request for a financial statement which will be provided by a certified public accountant.

4. As long as the corporation’s representatives have directly communicated with each other, they can fax contracts or through other electronic means they deem appropriate. This is also applicable to the other members as long as it is supported by minutes of the meeting to prove that they had direct communication.

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