Company Liquidation in Panama – Closing Your Company

Company liquidation in Panama is required when the business is no longer sustainable, and its continuation would lead to bankruptcy. Our Panama company incorporation agents can also assist business owners who are ready to terminate the activities of a registered company.

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 General Directorate of Revenue (DGI), the Social Security Fund, the Ministry of Commerce and Industries, the Municipality in which it was registered.
Court ruling for Panama company termination	Not required for a voluntary dissolution (registered with the Public Registry); a court is involved only in judicial liquidation
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.

What is company liquidation?

Liquidation is the process of ending the activities of a company through the distribution of its assets to creditors and shareholders (if any remain following the payment of debts).

Also referred to as winding up, company liquidation in Panama takes place with the assistance of a liquidator, and it can commence compulsorily or voluntarily.

What laws govern company liquidation and closure 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. When working with our team, the process is handled according to the Panama company laws.

What are the steps required for company liquidation in Panama?

The following steps presented below by our Panama offshore company formation specialists are relevant for both the liquidation phase and the dissolution phase:

The shareholders decide in favor of winding 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.

During company liquidation in Panama, the assets of the company are used to pay off its debts. If any assets remain, these are distributed to the shareholders, according to their participation in the company.

Does liquidation only take place for companies in Panama?

No. This process can also take place in the case of partnerships, such as a special limited partnership. The process is largely the same, following the mandatory steps of paying the creditors and any due debts before distributing the remaining assets (if any) among the partners.

What are the consequences of company liquidation in Panama?

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 being 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).

How are dissolution and liquidation linked?

Company dissolution may take place before the actual liquidation of the assets, as per Section XI of Law no. 32 of 26 February 1927 on anonymous companies in Panama. Below, our team highlights some key elements that link dissolution and liquidation, for clarification purposes:

The company’s directors act as its trustees for the purpose of settling the company’s affairs (including its debts and distributing the assets) whenever a company terminates as a result of dissolution or reaching its expiry date;
The company directors, when acting in their capacity to liquidate the assets of the company, may divide these among the shareholders, use them to settle the debts of the company, and/or initiate judicial procedures in the name of the company concerning its credits and assets;
In some cases, a dissolved company may continue to remain in existence for three years from its dissolution date; however, this is only for the purpose of initiating special procedures that concern the transfer of assets and any ongoing settlements. Lawfully, it cannot continue to engage in economic operations during the mentioned three-year period.

How do I appoint a company liquidator in Panama?

Once the dissolution and liquidation of the company have been decided, the Board of Directors may proceed to appoint a liquidator. In those cases in which the liquidation is a judicial one, a court may make this appointment following the shareholder’s petition.

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.