A shelf company is a corporation that has been registered as per the regulations in force and despite its registration, it has never been used for doing business. Investors can buy a shelf company in Panama as an alternative to incorporating a new legal entity, a process that will imply different steps and will have different costs.
The shelf corporation is often called an aged company due to the simple fact that it has acquired seniority by having been incorporated a few years prior to its acquisition. However, investors do not always purchase companies that have been registered many years before. For cost-related reasons or other motives, entrepreneurs may also choose to purchase a company that has been recently formed in Panama.
The shelf company has a number of advantages, as presented in this article by our team of Panama offshore company formation agents. Despite the fact that the general registration process is a fast one, and investors may open a new company within several days, some entrepreneurs will still prefer to buy a company that already has all of its documents in order. They will simply sign the transfer papers and will not have to be concerned with the general Panama incorporation process.
While foreign investors do not need to relocate hare in order to buy a shelf company, our team can also answer questions about immigration to Panama.
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What are the advantages of the shelf company?
Below, our team of Panama company formation agents lists the main advantages of the ready-made company:
- • Longevity: a shelf company has longevity because in most cases the corporation was incorporated sometime before the purchase; this can provide a better image for customers and business partners.
- • Investment capital: a company that has been on the market for some time can also benefit from easier access to investment capital and corporate credit.
- • Simplified procedures: the buyer will not need to spend time choosing the name and preparing the documents; however, any subsequent desired changes can be performed after the purchase.
- • Banking: as in the case of business relationships, banking may be easier for a company that has been incorporated for some time.
- • Lack of liabilities: a company that is founded and not used for business purposes has not accumulated any bad debt or liabilities, another important advantage.
These are just some of the reasons why foreign investors in Panama choose to buy a shelf company instead of engaging in the company formation process. Of course, investors may find that some business fields are more favorable for the use of the shelf corporation, compared to others, and they may decide to purchase an already existing company only when this suits their needs.
Because the process related to Panama incorporation is facile and fast, buying a shelf company is not in all cases faster than incorporating a new legal entity. While this may be the case in other jurisdictions where the company formation process lasts longer, the fact that in Panama it can be easily accomplished in a couple of days makes it as fast to start a new business as it is to purchase an already existing one. Nevertheless, investors will still enjoy the other aforementioned advantages for the shelf company, especially longevity, when purchasing an existing business.
Investors who wish to open a company in Panama and are unsure of whether or not the shelf company is suitable to their needs can reach out to our agents. The final decision will depend on a number of factors, for example, the objective of the company and the available budget, among others.
The main features and advantages of the shelf company are also presented in this video:
How can investors buy a shelf company in Panama?
Entrepreneurs who decide that they do not wish to open a company in Panama and instead purchase an existing one can easily do so with the help of our agents. Due diligence is a very important step during the company purchase procedure and it ensures that the targeted business is indeed a duly registered one, that has not accumulated any debts during the course of its existence.
A due diligence checklist and verification helps ensure that there are no antitrust and regulatory issues, that there are no information technology concerns (such as software bought or used by the company), that the company has not had any insurance claims and that is it not subject to any pending litigation proceedings.
Some of the main issues that are checked during the verification phase include the following:
- Contracts: shelf companies are typically left unused, however, if the company did at some point enter into agreements, the buyer should be well aware of any of these, signed with clients or other businesses;
- Accounting and tax: as offshore companies enjoy a good taxation regime (meaning that there is no corporate income tax in some cases), tax liability is an issue when purchasing a company only in some cases; however, observing the minimum accounting standards is required; our accountants in Panama can give you more details;
- Litigation: any history of litigation proceedings in which the company was involved, pending litigation (if any), unsatisfied judgments and other relevant documents about settlements;
- Licenses: is the company engaged in activities that require licensing and, if so, does it have the proper licenses? This should be checked accordingly; alternatively, investors can apply for the needed licenses and permits after they purchase the company.
The main reason why investors need to verify the elements presented above (and additional ones, as may be the case) is to make sure that their intended purchase is a safe one that that they do not overlook anything or they are not lead to falsely believe that a business has no issues when in fact it does. The list presented by our company formation experts is not an exhaustive one and the final elements that need to be verified will depend on many other particulars, such as the age of the company, the types of activities it engaged in in the past (if any) and whether or not it has employees in Panama.
Investors should keep in mind that the more features the shelf company is sold with (such as the aforementioned Panama bank account), the more complex the due diligence process will be.
Company owners can choose to remain in the country and a condition for this is to have lived as residents here for at least 5 years. Permanent residency is usually obtained, followed by citizenship in Panama. Several conditions apply to applicants who wish to acquire this status, among which most notably is the fact that there is no option for dual citizenship.
If you need details about residence permits, our immigration lawyers in Panama can answer your questions.
Once investors have decided that they prefer buying a ready-made company instead of incorporating one, the following step is to perform the aforementioned due diligence.
Shelf company packages in Panama are varied, including companies of different ages and with different features. The chosen company may or may not include a bank account (and, if it does, the price will be higher). Depending on their budget and the target type of company, investors will need to perform various other changes once they buy the company.
The shelf company can engage or continue business activities while changes are brought to it, however, all of the changes need to be registered accordingly.
Some of the changes that are brought to the purchased shelf company can include the following:
- – The name: shelf companies are assigned a name, however, if investors with to choose a different one, that will also be used for branding purposes, they can do so if the chosen new name is available; the abbreviation will be used accordingly and the change will be recorded;
- – Capital: the company can change its capital and shares through duly registered amendments to the corporate constitutive documents;
- – Directors: understandably, the shelf company purchase process is complete when the ownership of the company is transferred to the new beneficial owner; he may also choose to be one of the company directors, however, if not, another director or directors will be assigned;
- – Registered agent: the registered agent can be changed is needed; all companies are required to have one, thus the new owner will need to appoint a natural or legal person for this role.
Any amendments that are brought to the company’s articles of association are submitted by designated persons. Our team of company formation agents can handle all of part of these changes, usually through a power of attorney.
A issue that can be taken into consideration when purchasing a shelf company in Panama is the appointment of nominee directors. This is a third party that will act as the beneficial owner of the offshore corporation in order to allow the true investor to benefit from a high degree of confidentiality. This is a separate service that can be requested and the relationship between the nominee and the beneficial owner will be set forth through an agreement that will determine the fiduciary duties and the nominee’s involvement level in the company. Investors who wish to know more about this, in addition to how to purchase a shelf company, can reach out to us.
Our team will help investors by providing adequate information about the company that is to be purchased following the needed verifications. Moreover, investors can easily buy a shelf company when aided by one of our agents as we are able to prepare and handle the ownership transfer procedures.
If you decide to relocate here, the post-purchase can involve your steps to immigrate to Panama.
Company directors who are interested in knowing more about residency in Panama can reach out to our team for complete information about temporary and permanent residency, the general application steps, the required documents, as well as assistance when preparing the application for their residence permit. With our help, one can make sure that the submitted documents meet the requirements of the authorities.
Company formation in Panama
Investors can choose to buy a shelf company in Panama and follow the steps described above to make the necessary changes or they can choose to incorporate a new legal entity, with assistance received from our team of local company formation agents. As in the case of shelf company purchases, receiving professional, local assistance is important when opening a new company, especially of the investor cannot be present in Panama during the entire process.
Compared to buying a ready-made company, incorporating a legal entity will include one important and mandatory step: drawing up the legal entity’s articles of association. There are no nationality restrictions in Panama and individuals of any nationality may form a corporation. The Law on Corporations is the main document that governs the incorporation of legal entities at is stipulates those two or more persons, irrespective of their nationality, can form a company for any lawful purpose. Some of the most important information that is included in the articles of association is the following:
- – the identification details (name and address) for each of the company founders;
- – the name of the company, which cannot be similar to that of a company that is already registered;
- – the object of the corporation (or objects) as well as the amount of capital and the number and par value of the shares;
- – the domicile and the duration of the company;
- – the names and addressed of the company directors (the company must have three directors);
- – any other clauses, lawful ones, to which the shareholders have agreed upon.
One of the main advantages of buying a shelf company in Panama is that these articles of association have already been executed and investors save time by buying the ready made entity. However, if they choose to control the manner in which the articles are written and executed, they can do so in any other jurisdiction, within or outside of Panama, in any language. They will need to register them in Panama and in some case request the services if a Notary Office. When the constitutive document was executed outside of the Republic, it needs to be authenticated in Panama. Once the document is executed and authenticated, if needed, it is filed for registration.
There is no mandatory condition for the director of the company to comply with immigration to Panama requirements.
Additional information about Panamanian companies
A company incorporated in Panama is a separate legal entity from its founders. The following powers of the corporation are in place as per the laws in force, irrespective of whether the company was incorporated or was purchased as a shelf company:
- – the company can sue and be sued;
- – it can enter into all and any types of agreements;
- – it can acquire, purchase, use and hold movable and immovable property of any form; it can accept mortgages, leases and liens of all types;
- – it can conduct activities and exercise powers in foreign countries;
- – can borrow money, issue bonds, bills of exchange;
- – can be dissolved according to Law, either voluntarily or due to other reasons.
The company’s Shareholders’ Meetings can be held in the Republic or in another jurisdiction, if the articles of association or by-laws provide for this. It is an advantage for investors in Panama to include this provision in the articles or to make sure that this provision is in place whenever they choose to buy a ready-made company. By doing so, they can effectively make sure that the management of the company is straightforward and that they can call a shareholder meeting that is not constrained by its location.
As far as the management and control of the Panamanian company is concerned, the Law prescribed that the Board of Directors has the full control and management of the company’s affairs. The Board consists of at least three Directors, over 18 years of age. The powers of the directors may be limited only through the articles of incorporation and some of their powers may be thus reserved for the shareholders. The company directors can also be shareholders, however, this is not mandatory. The manner in which a director is elected or revoked shall be described in the articles of association. It is possible for a company director in Panama to be represented by a proxy at the Board meetings. The individual who will act as director proxy can be appointed through a public or a private instrument. A company director can be revoked at any time by means of a majority vote, made by the majority of the shareholders. A company officer or agent can be revoked at any time by means of a majority resolution adopted by the Directors or as otherwise provided for in the articles of association.
Investors who wish to know more about the Law that governs company formation and management in Panama can reach out to our company formation agents.
Companies in Panama
According to the Public Registry, the statistics for the types of registered companies are the following:
- – 10,476 anonymous companies;
- – 149 civil companies;
- – 83 foreign companies;
- – 131 limited liability companies.
Investors may choose to purchase a shelf company in one of these business forms, as available for purchase and as per their business needs.
Contact our Panama company formation agents for complete information about the shelf company and details on how you can purchase a ready-made legal entity. Alternatively, our team can also provide full assistance for opening a new company.
Our team offers more than company incorporation and shelf company purchase services. We can also answer questions about immigration to Panama, focusing on the entry conditions, the types of visas and/or residence permits, temporary and permanent stay in the country, as well as the conditions for foreigners who marry a Panamanian citizen. You can contact us for more details.
Our immigration lawyers in Panama can answer your questions if you wish to remain in the country for long-term business purposes.