Panama, known for its impressive canal and growing economy, is also an attractive place for entrepreneurs and businesspeople who want to set up their businesses in Central America. One of the most popular legal structures for doing so is the Limited Liability Company (LLC), a business entity that offers a number of advantages for those looking to establish a presence in this country. In this article, we will explore what you need to know about Limited Liability Companies in Panama and how they can be a valuable option for your business.

In Panama, limited liability companies (LLC) arise as an intermediate alternative between partnerships and corporations, offering similar advantages without immersing in a complex structure. LLCs are regulated by Law 4 of January 9, 2009, and are established for both civil and commercial purposes, not only within Panamanian territory but also globally.

The company's name or business name must be unique and is subject to availability in the Panama Public Registry. It is mandatory to include the suffix Limited Liability Company or S. de R.L. Furthermore, the duration of the LLC can be established as perpetual or limited to a specific term.

Main Characteristics:

• Subscribers: At least two individuals (whether Panamanian or foreign, natural or legal entities) are required to establish an LLC. It is worth noting that the initial subscribers do not need to be partners afterwards.
• Share capital: There is no immediate payment requirement when setting up the company. The share capital can be denominated in any currency. Partners' liability is limited to their respective contributions.
• Partners: The LLC must have at least two partners registered in the Panama Public Registry. These can be natural or legal persons, regardless of their nationality. Moreover, there is no established maximum limit of partners. At any time, a partner can transfer their share through a private agreement.

Incorporation Process:

To formalize an LLC, you can choose a private documented protocol or a public deed, requiring registration in the Public Registry. The social pact must contain:

• Identification of subscribers and partners with their respective addresses.
• LLC's domicile.
• Duration, which can be perpetual or limited.
• Business objective.
• Amount of authorized share capital, its division, and value per share.
• Designation of managers and representatives.
• Appointment of dignitaries or proxies and their powers.

To start, an initial capital investment of US$10,000 is recommended; however, this amount can be adjusted according to needs.

Key Advantages:

1. Transparency: LLCs offer transparency by having partners registered publicly, an increasingly relevant factor in today's business world.
2. Asset protection: Just like corporations, LLCs separate the personal assets of the partners from those of the company.
3. Flexibility: LLCs can be converted into Anonymous Societies and vice versa.
4. Tax exemptions: Profits earned outside of Panama are exempt from Panamanian income tax.

In conclusion, Limited Liability Companies in Panama are an attractive option for those wishing to establish a business in this country. They offer flexibility, limited liability, and a relatively simple incorporation process. However, it is essential to consult with legal and tax experts before making any decision to ensure that this structure is right for your specific needs. With the right guidance, an LLC can be the path to business success. If you need more information or want to start the process to set up your company, do not hesitate to contact us. At JVD Consultores, we are here to help!

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