AGM in Panama: What Multinational Companies Need to Know

If you’re managing corporate entities in Panama, understanding shareholder meeting requirements is essential for maintaining good governance. Unlike many jurisdictions that mandate strict annual general meeting (AGM) schedules, Panama offers a refreshingly flexible approach that appeals to multinational businesses worldwide.

Are AGMs mandatory for Panamanian corporations?

Here’s where Panama stands out. Panamanian law does not require corporations to hold annual general meetings. This flexibility is one of the reasons Panama has become the second most popular jurisdiction for company incorporation globally, with over 400,000 registered corporations.

However, flexibility doesn’t mean absence of governance. Companies should still hold shareholder meetings when important decisions arise. The General Assembly of Shareholders remains the supreme governing body of any Panamanian corporation, and certain corporate actions require formal shareholder approval.

When should shareholders meet?

While there’s no mandatory frequency, shareholder meetings become necessary for key decisions such as:

• Appointing or removing directors
• Amending the Charter of Incorporation (Pacto Social)
• Approving mergers, spin-offs, or dissolution
• Authorising the transfer of real property or substantial corporate assets
• Declaring dividends

Many companies still choose to hold annual meetings as a matter of good corporate practice, particularly those with multiple shareholders or complex governance structures. It demonstrates transparency and keeps stakeholders informed about corporate performance.

How are shareholder meetings convened?

Panamanian corporate law establishes clear procedures for calling meetings. The notice must be given in writing and should specify the purpose, time, and place of the meeting. Typically, the President or another authorised person issues this notice.

Notice periods depend on what the company’s articles of incorporation or bylaws specify. If these documents are silent, notice must be provided between 10 and 60 days before the meeting date. For companies with bearer shares, public notice through newspaper publication may be required.

One attractive feature: meetings can take place anywhere in the world if the articles of incorporation permit this. Shareholders may also participate through proxies, making global attendance more practical.

What are the quorum requirements?

Quorum requirements in Panama are generally determined by the company’s articles of incorporation. If not specified, the default rules apply. Once a quorum is present, resolutions typically pass by majority vote of shares represented.

Shareholders may waive notice requirements in writing, either before or after the meeting. Resolutions adopted at a meeting where all shareholders are present, whether personally or by proxy, are valid regardless of whether formal notice procedures were followed.

What rights do shareholders have?

Panamanian law protects shareholder rights robustly. The General Shareholders Meeting constitutes the supreme power of the corporation, but importantly, a majority vote cannot deprive shareholders of their acquired rights or impose resolutions that contravene the bylaws.

Shareholders have the right to:

• One vote per share at meetings, unless the articles provide otherwise
• Appoint proxy holders to vote on their behalf
• Protest against resolutions that violate the law, articles of incorporation, or bylaws
• Request judicial annulment of improper resolutions within 30 days
• Call for the appointment of auditors to examine company accounts

Minority shareholders representing at least 5% of issued and outstanding voting shares can request that a shareholder meeting be called.

What are directors’ responsibilities?

The Board of Directors must consist of at least three members, who can be natural persons or legal entities of any nationality. Directors hold significant responsibilities under Panamanian law and must exercise their duties with the care expected of “ordinarily prudent persons.”

Directors are not personally liable for corporate obligations. However, they may face joint and several liability for:

• Improper dividend declarations that reduce corporate capital below liabilities
• False reporting or declarations on substantial matters
• Violations of laws, the articles of incorporation, bylaws, or shareholder resolutions
• Mismanagement of corporate accounts

Directors who were absent with cause or who formally protested against majority decisions may be exempt from such liability. Importantly, liability claims typically require authorisation through a General Shareholders Meeting resolution.

What annual compliance obligations exist?

Even without mandatory AGMs, Panamanian corporations face several annual requirements:

Annual Franchise Tax: All corporations must pay USD 300 annually to the Public Registry. Payment deadlines depend on incorporation date: companies formed between January and June pay by July 15; those incorporated between July and December pay by January 15. Late penalties start at USD 50 and can accumulate to USD 300 for continued non-compliance.

Resident Agent: Every corporation must maintain a registered agent, typically a lawyer or accredited law firm, who acts as the legal representative before government authorities.

Accounting Records: Under Law 52 of 2016, certain entities must maintain accounting records, even those operating exclusively outside Panama.

Tax Filings: Companies with Panamanian-source income must submit annual income tax declarations by March 31, with the possibility of extension to April 30.

What happens if compliance lapses?

Non-compliance carries meaningful consequences. Failure to pay the annual franchise tax will prevent the Public Registry from processing any corporate changes or issuing Certificates of Good Standing. Accumulated debts can lead to registration suspension and, in serious cases, dissolution of the company.

For corporations operating within Panama, additional obligations apply, including VAT registration for annual income exceeding USD 36,000 and municipal tax filings.

What makes Panama attractive for corporate governance?

Panama’s corporate framework offers several advantages:

• No mandatory AGM requirements, allowing operational flexibility
• Meetings can be held anywhere globally
• Written resolutions in lieu of meetings are permitted
• Directors and shareholders can be of any nationality
• Territorial tax system exempts foreign-source income
• Strong privacy protections for corporate records
• Straightforward compliance with predictable annual costs

These features make Panama particularly appealing for holding companies, international trading operations, and asset protection structures.

What’s next?

Managing shareholder meetings and corporate governance in Panama requires attention to your specific corporate documents and strategic planning for key decisions. For more insights into AGM processes in other jurisdictions, explore our article on [AGM Requirements by Country].

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