The process of closing a corporation (Sociedad Anónima) in Panama is long and complicated, featuring a number of steps throughout which the entity is still legally open. This article examines the corporation closure process in Panama and clarifies a company’s status at each step.
Why do Panamanian corporation closures matter?
Being aware of corporation closures and how they can affect a company’s status is a vital part of any investigation. Where a Panamanian corporation is within its closure process – and whether or not it’s still legally active – will determine the parameters and approach of an investigation.
Corporation dissolution and closure in Panama
Closing a company in Panama is a seven-step process:
- The directors vote to dissolve the company.
- The shareholders meet within 10 days of the vote to approve the directors’ decision to dissolve the company.
- Once approved, the shareholders must record the names and addresses of the directors and officers of the company to submit to the public registry.
- The addresses of the directors and officers must be published in a newspaper where the entity is domiciled. If a newspaper does not exist in the locality, then the addresses must be published in the federal gazette. Following both filings, the company is now considered dissolved, but not yet closed.
- All corporations remain active for a period of three years after the shareholders approve their dissolution, or when dissolved by expiration of their statutory term of existence, to wind down their operations. However, the company may not continue doing business. During this period, directors act as fiduciaries.
- At the end of three years, the company is considered closed.
This closure process lasts much longer than other countries in Latin America, such as Mexico, where companies can close in as little as two months. It is necessary to exercise greater caution when investigating companies in Panama as a dissolved status there may not mean that the company is officially closed.