A corporation from Panama is one of the best business structures available offshore. Tax laws are favorable and protection for business owners is solid. Also, a Panama corporation offers you the widest range of offshore banking choices.
However, Panama corporations are not private. Officers and directors are listed in the public registry. And Panama did away with bearshare companies a few years back.
A Panama corporation must have 3 different directors and at least one officer. These positions can be filled by a person or a structure (corporation, LLC, foundation or trust). Most incorporators, including us, provide nominee directors.
However, you don’t ever want to have a nominee officer. Directors don’t have any control over the company’s day to day activities. And directors have no way to access a Panama corporation’s bank account.
Panama has made it impossible for nominee directors to harm the company because nominee directors are the standard in Panama.
Officers are a whole different matter. They generally have direct control over the company and its assets. They have the ability to enter into contracts and bind the corporation. A nominee officer can cause all kinds of problems for a Panama corporation.
For this reason, we never provide nominee officers. The risk to our clients is to great. If you want to gamble, go to Vegas. If you want a solid international business structure, do things right in Panama.
So, the officer positions in a Panama corporation need to be filled by you, the beneficial owner of the structure. You can provide one person who fills all three spots, or 2 or 3 different people for these spots. The maximum number of officers in the corporate documents is three (President, Secretary and Treasurer). Of course, the operating agreement can include other positions.
And this creates a privacy issue. The officers are disclosed in the public registry.
But there is a solution. The officer position can be filled by an individual or a structure. I generally recommend an offshore Limited Liability Company for simplicity.
This LLC can be formed in any country you wish. So, the LLC which acts as an officer in the Panama corporation can be incorporated in Belize, Nevis, or the Cook Islands where there is no public registry.
You can basically create a bearshare corporation in Panama by installing a Nevis LLC or LLCs as the officers of that company. The beneficial owner of the Panama corporation will be the single member of the Nevis LLC and the Nevis LLC will be the officer of the corporation.
In this way, only the name of the Nevis LLC, and the names of the nominee directors, will be disclosed in the public registry. The name of the beneficial owner is not shown anywhere and will be a secret between you and your bankers.
Please keep in mind that this article is about privacy for asset protection purposes. It’s focused on keeping your name out of Panama’s public registry and thereby making it more difficult for a potential creditor to file a claim against you.
This post is not about privacy from the tax man… especially the US IRS.
When you open your offshore bank account, you’ll need to provide copies of the Nevis LLC and your Panama corporation. The bank will know who owns the LLC and thus the corporation. And it will be you, the beneficial owner, who is the signer on the account.
As a signer on an offshore bank account, you’ll have certain tax filing obligations. For example, a US citizen will need to report the account on the FBAR form and file a corporate tax return on IRS Form 5471.
So, the Nevis LLC doesn’t impact your US tax filing obligations. It’s only there to keep your name of of the public registry.
This same technique can be used with Panama foundations. A Panama foundation is a hybrid between an offshore asset protection trust and a holding company. It provides maximum asset protection and estate planning, especially for offshore bank accounts and businesses or real estate in Panama.
The founder (settlor) of a Panama foundation can be a person or a foreign company. This person, the beneficial owner of the foundation, is disclosed in the public registry. We can mask their identity by using a Nevis LLC as the founder.
Keep in mind that a corporation does not include any estate planning features. If you’re concerned with passing the assets of a Panama corporation upon your death, hold that entity inside a Panama foundation.
I’m a big fan of the Panama foundation. This structure is used by Panamanians and foreigners alike. Every wealthy family in Panama holds their assets inside a foundation. Therefore, a Panama court would never rule to reduce the protections of a foundation. So doing would be to reduce the protections afforded to every well connected and high net worth family in the country.
I hope you’ve found this article on how to maximize privacy in a Panama corporation to be helpful. For more information on incorporating in Panama, please contact me at email@example.com or call us at (619) 550-2743. All consultations are free and confidential.