Myths and realities of Panamanian Corporations
During the last months the reader surely has come across diverse and perhaps incompatible information on the legal framework regarding the creation of corporations and private interest foundations. In such a context, it is not surprising to see a variety of questions arise. With this article, I intend to contribute to this debate with some reflections, in order to support it in a constructive way.
It is mandatory under Panamanian Law for all corporations, foreign corporations, private interest foundations and limited liability companies registered in Panama to maintain, at all times, a Resident Agent who shall be a lawyer or a law firm.
On this subject, it is important to point out that no Panamanian law obliges the Resident Agent to supervise or be responsible for the activities of the corporations, neither is there a law which obliges corporations to report its activities to the Resident Agent.
After the theft of information to a Panamanian firm, corporations have been demonized, to the point where the public has been directed towards the perception that the latter are only engaged in criminal activities. Nothing farther from the truth. Whomever does not know the law is prone to making mistakes and being prejudiced, so I find it convenient to comment on the role corporations play in Panama.
The corporations are cause and effect of global economic development. That is why developed countries have laws for corporations. Nowadays, Panama has very strict rules for the resident agent to know its clients, but not in a manner that the latter is liable for the actions of these clients.
This legal framework exists in Panama since 1927 and for 90 years it has been used, locally and internationally, to carry out all kinds of lawful businesses, since its use does not respond to any governmental supervisions, which makes it a law of easy implementation. Corporations are legal instruments which protect the right to privacy of individuals, this being one of the internationally recognized human rights, as validated on recent rulings of the highest courts in different countries such as France, Great Britain and Canada, for instance.
On the other hand, we only have to look at large businesses (industry, banking, insurance, maritime, etc.) in our country and abroad, as well as those of small size, to notice that they are all developed through corporations.
The figure of the Panamanian corporation survived the 1929 Great Depression, the second World War, Panama´s Coup d’Etat of 1968 and the military dictatorship in our country which ended in 1989, which makes it important to not lose confidence in the legal regulations that have been so reliable, for so many years and in the face of so many events, precisely to be able to effectively counteract groundless criteria suggesting that corporations are only used to conceal crime and hide criminals.
Facing this context, let us not forget that it is in our hands to be properly informed and, consequently, form our own judgement in order to evaluate fairly this aspect of the legal structure of the country and the important role it has played and continues to play in our economic development.