PANAMA CORPORATIONS

The Republic of Panama has one of the most flexible legislations for the incorporation of corporations. Law 32 of February 26, 1927 (“Corporation Law”) expresses that two or more persons, of any nationality, even though not domiciled in the Republic of Panama, may form a corporation for any lawful purpose pursuant to the formalities stipulated by law.

A corporation organized according to the law of the Republic of Panama has the following powers:

1. To sue and be sued in court;

2. To adopt and use a corporate seal and change it when as it convenience.

3. To acquire, purchase, hold, use and transfer movable and immovable properties of any kind and to make and accept pledges, mortgages, leases, liens and encumbrances of all kind;

4. To appoint officers and agents;

5. To enter into all kinds of contracts;

6. To issue, without breaching existing laws or the articles of incorporations, by laws for the management, regulation and administration of its affairs and assets, for the transfer of its shares, for the calling of shareholder’s and director ‘s meetings for any legal purposes.

7. To conduct business and exercise its powers in foreign countries;

8. To agree upon its dissolution in accordance with the law, whether voluntarily or for other reasons;

9. To borrow money and incur debts in connection with its business or for any legal object; to issue bonds, promissory notes, bills of exchange and other obligations instruments (which may or may not be convertible into shares of the corporation) payable on determined date or dates, or payable upon the happening of a specific event; whether secured by a mortgage or pledge or without guarantee, for money borrowed or in payment of acquired assets, or for any other legal consideration;

10. To guarantee, acquire, buy, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose or trade in shares, bonds or other obligations issued by other corporations or by any municipality, province, state or government;

11. To do anything necessary in order to execute the purposes established in the articles of incorporation or in its amendments or what is necessary or appropriate for the protection and benefit of the corporation and, in general, to execute any lawful business although not similar to any of the purposes specified in the articles of incorporation or its amendments.

The name of the corporation shall not be identical or similar to another pre-existing corporation. The name shall include a word, phrase or abbreviation which indicates that it is a corporation and distinguishes it from a natural person or corporation of another nature. The name of the corporation may be expressed in any language.

BOARD OF DIRECTORS AND OFFICERS
The business of the corporation shall be administered and conducted by a Board of Directors composed of at least three members. Corporation shall have a President, a Secretary and a Treasurer elected by the Board of Directors and may also have officers, agents and representatives determined by the Board of Directors, the by-laws or the articles of incorporation. Directors and officers could be corporate entities. It is not necessary for a person be a member of the Board of Directors in order to be an officer. The Board of Directors may exercise all the powers of the corporation except those that the law, its articles of incorporation or the by-laws confer on or reserve to the shareholders.

SHAREHOLDERS
The corporation shall have the power to create and issue one or more classes of shares, with the designations, preferences, privileges, voting rights, restrictions or requirements and other rights determined by the articles of incorporation and subject to the redemption rights which the corporation has reserved in the articles of incorporation. Nominative or bearer shares are permitted. The names of the shareholders are confidential and not reveal to the Public Registry of the Republic of Panama. Corporate entities can act as shareholders.

TAXES AND ANNUAL FEES
Incomes produced by corporations outside of the Republic of Panama are not taxable. It is not necessary to file tax returns in Panama, if the corporation engages in activities outside the Republic of Panama. Corporations must pay at the time of incorporation an initial tax of two hundred fifty dollars (US$.250.00). In the following years, the annual tax is three hundred dollars (US$.300.00). Every corporation should have a resident agent in the Republic of Panama. The resident agent is a Panamanian lawyer of law firm. The resident agent fee is US$250.00.