Company liquidation in Panama is required when the business is no longer sustainable and its continuation would lead to bankruptcy.
The liquidation comprises the actions required to centralize and sell the company’s assets, as supervised by a liquidator, for the purpose of paying off the legal entity’s debts to its creditors. Once this is completed, the former owners can proceed to close a company in Panama.
Our Panama company incorporation agents can also assist business owners who are ready to terminate the activities of a registered company. In this article, you will find the basic steps for company liquidation in Panama, as well as information about the general dissolution of a legal entity. For more details, as well as assistance during this process, do not hesitate to reach out to our team.
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Winding up a company in Panama
The combined dissolution and liquidation take place according to the Company Law and the result is that the company is struck off the Panamanian Public Registry.
| Quick Facts | |
|---|---|
| Grounds for dissolving a Panamanian company | When it reaches its expiration period (if applicable), or as decided by the shareholders/directors. |
Dissolution upon expiration | As per the provisions for the expiration of the company set forth in its constitutive documents. |
Dissolution via decision | Following a special meeting held for this purpose. |
| Dissolution submission | The minutes of the decision to dissolve the company are registered with the Public Registry of Panama. |
| Dissolution notification | The decision to terminate the company is made public and the concerned parties are notified accordingly. |
| Liquidation process | After the decision to dissolve the company is made, the liquidation process will be concerned with paying the company’s remaining liabilities. |
| Liquidator | Usually appointed by the company shareholders |
| Liquidator duties | Determine the company’s assets, make the needed creditor payments, distributed the remaining assets (if any) to the shareholders. |
| Liquidated company activities | A company that is under liquidation will continue to exist for three more years, however, only to fulfill the specific procedures. |
| Final liquidation documents | A shareholder’s resolution confirming the completion of the liquidation. |
| Post-liquidation notifications | The Public Registry is notified of the liquidation process termination. |
| Company de-registration | The company is also de-registered from the Directorate of General Income, the Social Security Fund, the Ministry of Commerce and Industries, the Municipality in which it was registered. |
| Court ruling for Panama company termination | Yes |
| Other situations for terminating a company in Panama | This can be done as a result of a merger with another company. Our team can give you more details. |
| Liquidation process duration (approx.) | 3 years to complete the process; a liquidated company is also dissolved after the expiry of this term. |
The following steps presented below by our Panama offshore company formation specialists are relevant for both the liquidation phase and the dissolution one:
- the shareholders decide in favor of winging up a company in Panama; this is documented in the minutes of the meeting;
- the dissolution agreement is drawn up and the notification of the commencement of the proceedings is registered with the Panamanian authorities; the resolution is drafted and notarized according to law;
- the company will continue its activities, however, only so far as to be able to complete the liquidation phase;
- after the completion of the liquidation, the shareholders will meet once more to take note of the end of the process.
An effect of the actions to close a company in Panama is that it will no longer be:
- subject to taxation; it will have to present (within 30 days of termination) a proper notice to the Panamanian tax authorities; it will also pay any due taxes at this point;
- subject to be registered as an employer with the Social Security Fund; it will also need to send a notification to the Fund of its termination (30 days before the cessation of activities);
- registered with the corresponding Municipality in which it was incorporated; moreover, it will no longer be recorded with the Ministry of Commerce and Industries (if the company had an operation notice).
Conditions for company liquidation in Panama
While voluntary dissolution is more common, a company can also be dissolved through a court ruling. Moreover, a legal entity can also be dissolved as a result of a merger with another company (the company that is merged ceases its existence).
It is common for the dissolution and the liquidation process to take place with the assistance of a local team of experts, such as our agents in Panama.
The Panama Public Registry offers us a glimpse into the number of companies that have been dissolved over the years. Our Panama company formation agents highlight the following data below:
- in the first five months of 2024 there were 21 dissolved limited liability companies;
- 2 foreign companies were dissolved during the same period;
- for comparison purposes, the total number of dissolved limited liability companies was 64 in 2023.
If you would like to know more about the steps required for company liquidation in Panama, or if you need assistance during this process, please reach out to our agents. We specialize in opening companies in Panama, however, we are able to assist investors throughout the life of their business.
For more information about our services, including those that are oriented toward individuals interested in immigration to Panama or obtaining a residence permit in Panama, please do not hesitate to contact us.