REPUBLIC OF PANAMA, Law 32 of
February 26, 1927, GENERAL
THE NATIONAL ASSEMBLY OF PANAMA
Two or more persons of lawful age, of any nationality even
though not domiciled in the Republic of Panama, may, in
accordance with the formalities hereinafter provided, form a
corporation for any lawful purpose or purposes.
Such persons desiring to form such a corporation shall sign
articles of incorporation which shall set forth:
1. The names and domiciles of each of the subscribers of the
2. The name of the proposed corporation which shall not be the
same as, nor so similar as to cause confusion with, the name of
any other existing corporation. The name shall include a word,
phrase or abbreviation which indicates that it is a corporation
to distinguish it from a natural person or company of any other
nature. The name of the corporation may be expressed in any
3. The general purpose or purposes of the corporation;
4. The amount of the capital stock and the number and par value
of the shares of which it is to consist; and if the corporation
is to issue shares without par value, the statements required by
Article 22 of this law. The capital stock and par value of
shares of any corporation may be expressed in terms of the legal
currency of the Republic or of gold units of the legal currency
of any other country, or of both;
5. If the shares are to be classified, the number of shares to
be included in each class and the designations, preferences,
privileges and voting powers or restrictions or qualifications
of the shares of each class; or that such designations,
preferences, privileges and voting powers or restrictions or
qualifications shall be determined by resolution of the majority
in interest of the Stockholders or of the majority of the
6. The number of shares of stock which each subscriber of the
articles of incorporation agrees to take;
7. The domicile of the corporation and the name and domicile of
its resident agent in the Republic, who may be a juridical
8. Its duration;
9. The number, names and addresses of its Directors, not less
10. Any other lawful provisions which the subscribers of the
articles of incorporation may desire to include.
The articles of incorporation may be executed in any place,
within or outside the Republic, and in any language.
The articles of incorporation shall be in the form of a public
deed, or in any other form, provided that said articles be
acknowledged before a Notary Public or before any other officer
authorised to take acknowledgements at the place of the
If the articles of incorporation are not in the form of a public
deed, they must be protocolized in a Notary Office of the
If the said document has been executed outside of the Republic,
it must, before it is protocolized, be authenticated by a
Panamanian Consul, or, if there should be no such Consul, by the
Consul of a country friendly to Panama; and if it should be in a
foreign language it must be protocolized together with an
authenticated translation subscribed by an official or public
interpreter of the Republic.
The public deed or the protocolized document containing the
articles of incorporation must be presented for registration in
the Mercantile Registry.
The incorporation of a corporation shall have no effect with
respect to third parties until the articles of incorporation
have been recorded.
Any corporation formed under this law may from time to time
amend its articles of incorporation in any respect; provided
such articles of incorporation, when so amended, shall conform
to the provisions of this law.
Therefore, the corporation may by such amendment change the
number of its shares or of any class of its outstanding shares
at the time of such amendment, change the par value of the
outstanding shares of any class, change the outstanding shares
of any class having par value into the same or different number
of shares of the same or a different class without par value, or
the outstanding shares of a class without par value into the
same or different number of shares of the same or different
class having par value, or increase the amount or the number of
shares of its authorised capital stock or divide its authorised
capital stock into classes or increase the number of classes of
its authorised capital stock, or change their designations,
rights, privileges, preferences, voting powers, restrictions or
qualifications. But the capital stock of a corporation shall not
be reduced except in accordance with the provisions of articles
14 et seq of this law.
The amendments shall be made by the persons hereinafter
mentioned and in the manner provided in this law with respect to
the execution of the articles of incorporation.
In case no share has been issued, the articles of amendment
shall be signed by every subscriber of the articles of
incorporation and by every subscriber to the stock of the
In case share has been issued, such articles of amendment shall
(a) In person or by proxy by the holders of all the outstanding
shares of the corporation entitled to vote thereon and shall be
accompanied by a certificate of the Secretary or an Assistant
Secretary of the corporation that the persons who have executed
the articles of amendment, in person or by proxy, constitute the
holders of all the outstanding shares of the corporation
entitled to vote thereon; or
(b) By the President or a Vice-President and the Secretary or
Assistant Secretary of the corporation, who shall sign and annex
thereto a certificate stating that they have been authorised to
execute such articles of amendment by the votes, cast in person
or by proxy, of the holders of a majority of such shares and
that such votes were cast at a stockholders meeting held on the
date specified in the notice or waiver of notice.
In case that the articles of amendment alter the preferences
of outstanding shares of any class or authorise the issuance of
shares having preferences which are in any respect superior to
those of the outstanding shares of any class, the certificate
referred to in paragraph (b) of the preceding article shall
state that the officers signing the same have been authorised to
execute such articles of amendment by the vote cast in person or
by proxy of the holders of a majority of the outstanding shares
of each class entitled to vote thereon, cast at a stockholders'
meeting held on a date specified upon notice or waiver of
If the articles of incorporation provide that the votes of
the holders of more than a majority of the outstanding shares of
any class or classes shall be required in order to effect any
amendment of any provision of the articles of incorporation, the
certificate referred to in paragraph (b) of article 10 shall
state that such amendment has been authorised in that manner.
Unless the articles of incorporation or any amendment
thereof otherwise provide, in the event of an increase of stock,
each stockholder shall be entitled to a preferential right to
subscribe for shares of stock, issued pursuant to such increase,
in proportion to the number of shares then held by him.
Any corporation may reduce its authorised capital stock by
an amendment of its articles of incorporation; but no
distribution of assets may be made pursuant to any such
reduction, which will reduce the actual value of its remaining
assets to an amount less than the total amount of its debts and
liabilities plus the amount as reduced of its issued capital
stock. There shall be annexed to the articles of amendment a
certificate issued under oath by the President or a
Vice-President and of the Treasurer or an Assistant Treasurer
stating that no distribution of assets made or to be made
pursuant thereto will violate the provision contained in this
article. The judgment of the Directors as to the value of the
assets and their determination of debts and liabilities shall be
conclusive, except in the case of fraud.
Any corporation, unless its articles of incorporation
otherwise provide, may acquire shares of its own stock. If such
acquisition is made out of funds or properties other than
surplus or net profits, the shares of stock so acquired shall be
cancelled by the reduction of the amount of issued stock: but
such shares may be reissued if the authorised capital stock
shall not have been reduced by such cancellation.
Shares of its own stock acquired by a corporation with funds
taken from surplus of its assets over its liabilities or from
net earnings, may be held by such corporation or sold by it from
time to time for its corporate purposes and may be cancelled or
reissued from time to time by the Board of Directors.
The shares of stock in the corporation held by the
corporation shall not be voted upon, directly or indirectly, at
any meeting of stockholders.
No corporation shall purchase or otherwise acquire its own
stock out of funds or property other than its surplus or net
profits, if such purchase or acquisition will reduce the actual
value of its assets to an amount less than the total amount of
its debts and liabilities plus the amount as reduced of its
issued capital stock. The judgment of the Directors as to the
value of the assets, and their determination of the debts and
liabilities shall be conclusive, except in the case of fraud.
OF THE FACULTIES OF THE CORPORATION
Every corporation organised under this law shall have the
following powers, in addition to other powers specified in this
1. To sue and be sued in any court;
2. To adopt and use a corporate seal and alter the same at
3. To acquire, purchase, hold, use and convey real and personal
property of all kinds and make and accept pledges, leases,
mortgages, liens, and encumbrances of all kinds;
4. To appoint officers and agents;
5. To make contracts of all kinds;
6. To make by-laws not inconsistent with any existing laws of
the Republic or its articles of incorporation, for the
management, regulation and government of its affairs and
property, the transfer of its stock and the calling and holding
of meetings of its stockholders and directors, and for all other
7. To carry on business and to exercise its powers in the
Republic and in foreign countries;
8. To dissolve itself or to be dissolved in accordance with law,
voluntarily or for other cause;
9. To borrow money and contract debts in connection with its
business or for any lawful purpose; to issue bonds, notes, bills
or exchange, debentures and other obligations and evidences of
indebtedness (which may or may not be convertible into stock of
the corporation) payable at a specified time or times payable
upon the happening of a specified event or events whether
secured by mortgage, pledge or otherwise, or unsecured, for
money borrowed or in payment for property purchased or acquired
or for any other lawful objects;
10. To guarantee, acquire, purchase, hold, sell, assign,
transfer, mortgage, pledge or otherwise dispose of or deal in
shares of the capital stock of, or bonds, securities or other
evidences of indebtedness created by other corporations, or of
any municipality, province, state or government;
11. To do all things necessary for the accomplishment of the
objects enumerated in its articles of incorporation or any
amendment thereof or necessary or incidental to the protection
and benefit of the corporation, and in general to carry on any
lawful business whether or not such business is similar in
nature to the objects set forth in its articles of incorporation
or any amendment thereof.
Every corporation shall have power to create and issue one
or more classes of shares of stock with such designations,
preferences, privileges, voting powers or restrictions or
qualifications thereof and other rights as its articles of
incorporation provide and subject to such rights of redemption
as shall have been reserved to the corporation in such articles
The articles of incorporation may provide that shares of stock
of any class shall be convertible into shares of one or more
Shares of stock may have a nominal or par value. Such shares
may be issued as fully paid and non-assessable or as partly paid
or without any payment having been made thereon. Unless the
articles of incorporation otherwise provide, full paid and
non-assessable shares having a par value, or securities or
shares convertible into such shares, shall not be issued for a
consideration which, in the judgment of the Board of Directors,
is less in value than the par value of such shares or of the
shares into which such securities or shares are convertible, nor
shall certificates for partly paid shares state that there has
been paid thereon an amount greater than the value, in the
judgment of the Board of Directors, of the consideration
actually paid thereon. Such consideration may be money, labour,
services or property of any kind.
The judgment of the Board of Directors as to the value of any
such consideration shall be conclusive, except in case of fraud.
Shares of stock may be created and issued without par value
provided there be included in the articles of incorporation the
1. The total number of shares that may be issued by the
2. The number of shares, if any, which are to have a par value
and the par value of each.
3. The number of shares which are to be without par value.
4. Either one of the following statements:
(a) The stated capital of the corporation shall be at least
equal to the sum of the aggregate par value of all issued shares
having par value plus a certain amount in respect to every
issued share without par value plus such amounts as from time to
time by resolution of the Board of Directors may be transferred
(b) The stated capital of the corporation shall be at least
equal to the whole of the aggregate par value of all issued
shares having par value plus the aggregate amount of
consideration received by the corporation for the issuance of
shares without par value, plus such amounts as from time to time
by resolution or resolutions of the Board of Directors may be
There may also be included in such articles of incorporation an
additional statement that the stated capital shall not be less
than the amount therein specified.
Subject to the designations, preferences, privileges and
voting powers or restrictions or qualifications granted or
imposed in respect to any class of shares, each share with or
without par value shall be equal to every other share of the
Any corporation may issue and may sell its authorised shares
without par value for such consideration as may be prescribed in
its articles of incorporation; or for such consideration which,
in the judgment of the Board of Directors, shall be the fair
value of such shares; or for such consideration as from time to
time may be fixed by the Board of Directors pursuant to
authority conferred in such articles of incorporation; or for
such consideration as shall be determined by the holders of a
majority of the shares entitled to vote.
Any and all shares issued as permitted by Articles 22, 23
and 24 of this law shall be deemed fully paid and
non-assessable. The holders of such shares shall not be liable
to the corporation or to its creditors in respect thereto.
The shares of a corporation shall be paid at such times and
in such a manner as the Board of Directors may determine. If
default shall be made in the payment, the Board of Directors may
either proceed against the debtor to enforce payment of the
amounts due and unpaid and to collect such damages as the
corporation may have suffered, or rescind the contract in
respect to the shareholder in default, having the right in this
last instance to retain for the corporation such amounts as the
defaulting shareholder may be entitled to receive from the funds
of the corporation.
In the event that the corporation should proceed to rescind the
contract in respect to the stockholder in default and to retain
the amounts to which he may be entitled, the Board of Directors
shall give at least six days advance notice to such shareholder.
Shares acquired by the corporation by virtue of the provisions
of this article may be reissued or re-offered for subscription.
Every share certificate shall contain the following
1. The reference to the inscription of the corporation in the
2. The amount of its capital stock.
3. The number of shares owned by the holder thereof.
4. The class of share, if there be more than one class, as well
as the special conditions, designations, preferences,
privileges, premiums, advantages and restrictions or
qualifications which some classes of shares may have over the
5. If the
shares which it represents are fully paid and non-assessable,
the share certificate shall so state; and if such shares are not
fully paid and are assessable the certificate shall state the
amount or amounts which have been paid thereon.
6. If the shares are represented by a certificate issued in the
name of the owner, it should contain the name of said owner.
Shares may be issued to bearer only if fully paid and
Shares represented by a certificate issued in the name of the
owner shall be transferable on the books of the corporation in
such manner and under such regulations as may be provided in the
articles of incorporation or in the by-laws. But in no case
shall the transfer of stock be binding on the corporation unless
it shall have been registered upon the corporation books.
If the stockholder shall be indebted to the corporation it may
refuse to permit the transfer of his stock until such
indebtedness is paid. But in all cases the transferor and the
transferee shall be jointly liable for the payment of the
amounts owed to the corporation by virtue of the shares so
The transfer of shares issued to bearer requires only
delivery of the certificate.
If so provided in the articles of incorporation, any holder
of a certificate of shares issued to bearer may exchange such
certificate for a certificate for a like number of shares issued
in his name; and the holder of a certificate of shares issued in
the name of the owner may exchange it for a certificate for a
like number of shares issued to bearer.
The articles of incorporation may provide that in case a
stockholder desires to dispose of his shares of stock, the
corporation or any other stockholder thereof shall have a
preferential right to purchase such shares.
It may also impose other restrictions upon the transfer of the
shares; but no restriction which shall absolutely prevent a
stockholder from disposing of his shares of stock shall be
Every corporation may issue a new share certificate in the
place of any certificate theretofore issued by it alleged to
have been destroyed, lost or stolen. The Directors authorising
such issue of a new certificate may require the owner of the
destroyed lost or stolen certificate to give the corporation
such security or indemnity as they may direct against any claim
that may be made against the corporation.
The articles of incorporation may provide that the holders
of any designated class or classes of shares shall not be
entitled to vote, or may otherwise limit or define the
respective voting powers of the several classes of shares.
The provisions of this article shall prevail in accordance with
their terms in all elections and in all proceedings in which the
law requires the vote or the written consent of the holders of
all of the shares or of a specified proportion of the shares of
The articles of incorporation may also provide that for
specified purposes the vote of more than a majority of the
holders of any class of shares shall be required.
One or more stockholders by agreement in writing may
transfer their shares to a voting trustee or trustees for the
purpose of conferring upon it or them the right to vote thereon
for the period and upon the terms and conditions therein stated.
Every other stockholder may transfer his shares to the same
trustee or trustees and thereupon shall be a party to such
agreement. The certificates of shares so transferred shall be
surrendered and cancelled and new certificates therefore issued
to such trustee or trustees, in which it shall appear that they
are issued pursuant to such agreement, and in the stock register
of the corporation that fact shall also be noted. In order that
the provision contained in this article be carried into effect
it will be necessary that a certified copy of such agreement be
filed with the corporation.
Every corporation organised under this law shall keep at its
office in the Republic, or at such other place or places as the
articles of incorporation or the by-laws provide, a book to be
known as the stock register, containing (except in the case of
shares issued to bearer) the names alphabetically arranged of
all persons who are stockholders of the corporation, showing
their places of residence, the number of shares held by them
respectively, the time when they respectively became the owners
thereof and the amount paid thereon or that they are fully paid
In the case of shares issued to bearer such stock register shall
state the number of shares so issued, and the date of issue and
that such shares are fully paid and non-assessable.
Dividends may be paid to the stockholders from the net
earnings or profits of a corporation or from the surplus of its
assets over its liabilities, but not otherwise. The corporation
may declare and may pay dividends upon the basis of the amount
actually paid upon partly paid shares of stock.
When the directors shall so determine, dividends may be paid
in shares of the corporation; provided that the shares issued
for such purpose shall be authorised and provided, if such
shares have not hereto before been issued, there shall be
transferred from surplus to the capital of the corporation an
amount at least equal to that for which such shares could be
Every stockholder shall be personally liable to the
creditors of the corporation only to an amount equal to the
amount unpaid on his shares; but no action shall be brought
against a stockholder for any debt of the corporation until
judgment therefore has been recovered against the corporation
and an execution against the assets thereon has been returned
unsatisfied in whole or in part.
Whenever under the provisions of this law the approval or
authorisation of the stockholders is required, the notice of the
meeting shall be in writing and in the name of the President or
a Vice-President or the Secretary or an Assistant-Secretary or
of such other person or persons as the by-laws or articles of
incorporation may prescribe or permit.
Such notice shall state the purpose or purposes for which the
meeting is called and the time and place at which it is to be
All meetings of stockholders shall be held within the
Republic, unless otherwise provided in the articles of
incorporation or by-laws.
Such notice shall be given at such time prior to any such
meeting and in such manner as the articles of incorporation or
by-laws of the corporation provide; but unless they otherwise
provide, such notice shall be given personally or by mail upon
each stockholder of record entitled to vote at such meeting not
less than ten or more than sixty days before such meeting.
If the corporation has issued shares to bearer, notice of
stockholders' meetings shall be published in such manner, as the
articles of incorporation or by-laws provide.
Any stockholder may waive notice of any meeting in writing
signed by him or his representative either before or after the
The resolutions taken in any meeting at which all
stockholders are present in person or by proxy shall be valid
for all purposes and the resolutions taken in any meeting at
which a quorum is so present and notice of which shall have been
so waived by all absent stockholders, shall be valid for all
purposes stated in each waiver, notwithstanding that in either
case the notice required by this law or by the articles of
incorporation or the by-laws shall not have been given.
Unless otherwise provided in the articles of incorporation,
every stockholder of a corporation shall be entitled at each
meeting of stockholders thereof to one vote for each share of
stock of any class and whether with or without par value
standing in his name on the books of the corporation. It is
hereby understood, however, that unless contrary provision
should be made in the articles of incorporation, the directors
may prescribe a period not exceeding forty days prior to any
meeting of the stockholders during which no transfer of stock on
the books of the corporation may be made, or may fix a day not
more than forty days prior to the holding of any such meeting as
the day as of which stockholders (other than the holders of
shares issued to bearer) entitled to notice of and to vote at
such meeting shall be determined, in which event, only
stockholders of record on such day shall be entitled to notice
or to vote at such meeting.
In the case of shares issued to bearer, the bearer shall be
entitled to one vote at any meeting of the stockholders for each
share of stock entitled to vote, upon presentation at such
meeting of such certificate or certificates, or upon
presentation of such other evidence of ownership as may be
prescribed by the articles of incorporation or by-laws.
At any meeting of the stockholders of any corporation any
stockholder may be represented and vote by proxy or proxies (who
need not be stockholders) appointed by an instrument in writing
public or private, with or without power of substitution.
The articles of incorporation of any corporation may provide
that at all elections of directors of such corporation each
holder of stock possessing the right to vote for directors shall
be entitled to as many votes as shall equal the number of his
shares of stock multiplied by the number of directors to be
elected, and that he may cast all of such votes for a single
director or may distribute them among the number to be voted for
or any two or more of them as he may see fit.
The business of every corporation shall be managed by a
board of not less than three directors, all of whom shall be
male or female persons of full age.
Subject to the provisions of this law and of the articles of
incorporation, the board of directors of every corporation shall
have full control over the affairs of the corporation.
The Board of Directors may exercise all of the powers of the
corporation except those that the law or the articles of
incorporation or the by-laws confer upon or reserve to the
Subject to the provisions of this law and of its articles of
incorporation, the number of directors shall be fixed by the
by-laws of the corporation.
A majority of the board of directors of a corporation at a
meeting duly assembled shall be necessary to constitute a quorum
for the transaction of business provided, however, that the
articles or incorporation may provide that a certain number of
the directors, whether more or less, than a majority, shall be
necessary to constitute a quorum.
The act of a majority of the directors present at a meeting
at which a quorum is present shall be the act of the board of
Unless otherwise provided in the articles of incorporation
no director need be a stockholder.
The directors may make, alter, amend and repeal the by-laws
of the corporation, unless otherwise provided by the articles of
incorporation, or in the by-laws adopted by the stockholders.
The directors of every corporation shall be chosen at the
time and place and in the manner provided for by the articles of
incorporation or by-laws.
Vacancies in the board of directors shall be filled in the
manner prescribed by the articles of incorporation or by-laws.
Subject to the provisions contained in the two foregoing
articles, vacancies, whether resulting from an increase in the
authorised number of directors or otherwise, may be filled by
the vote of a majority of the directors then in office.
If the directors shall not be elected on the day designated
for the purpose, the directors then in office shall continue to
hold their offices and discharge their duties until their
respective successors shall have been elected.
Unless otherwise provided in the articles of incorporation
or in the by-laws, the board of directors may appoint two or
more of their members to constitute a committee or committees,
who shall have and exercise the powers of the board of directors
in the management of the business and affairs of the corporation
to the extent and subject to the restrictions expressed in the
articles of incorporation, the by-laws, or the resolutions
appointing such committee or committees.
If the articles of incorporation so provide, at any meeting
of the directors, any director may be represented and vote by
proxy or proxies (who need not be directors), appointed by an
instrument in writing, public or private, with or without power
Directors may be removed at any time by the vote of the
holders of a majority of the outstanding shares entitled to vote
for directors. Officers, agents and employees may be removed at
any time by the vote of a majority of the directors, or in such
other manner as the articles of incorporation or the by-laws.
If any dividend or distribution of assets be declared or
paid which shall reduce the value of the assets of the
corporation to less than the aggregate amount of its debts and
liabilities, including capital stock, or if a reduction of
capital stock be made, or if any report or statement be made
which shall be false in any material representation, the
directors of the corporation who assent thereto with knowledge
of the impairment of the capital stock, or falsity as the case
may be, shall be jointly and severally liable to the creditors
of the corporation for any loss or damage arising there from.
Every corporation shall have a President, a Secretary and a
Treasurer, who shall be chosen by the Board of Directors, and
may also have such other officers, agents and representatives as
the Board of Directors or the by-laws or the articles of
incorporation may determine and who shall be chosen in the
manner provided thereby.
Any person may hold two or more offices, if so provided by
the articles of incorporation or the by-laws.
No officer need be a director of the corporation unless the
articles of incorporation or by-laws so provide.
SALE OF ASSETS AND FRANCHISES
Every corporation may, by action taken at any meeting of its
Board of Directors, sell, lease, exchange or otherwise dispose
of all or part of its assets, including its goodwill and its
corporate franchise, upon such terms and conditions as its Board
of Directors deem expedient, if authorised by the affirmative
vote of stockholders holding a majority of the shares entitled
to voting power and given at a stockholders' meeting called for
that purpose in the manner provided in Articles 40 and 44 of
this law or if authorised by the written consent of such
Notwithstanding the provisions contained in the preceding
article, the articles of incorporation may require the consent
of some particular class of stockholders in order to grant the
authority referred to in said article.
Unless the articles of incorporation provide otherwise no
vote or consent of stockholders shall be necessary for a
transfer of assets in trust, or a pledge or mortgage thereof to
secure indebtedness of the corporation.
Subject to the provisions of their articles of
incorporation, any two or more corporations organised under this
law may consolidate into a single new corporation. The
Directors, or a majority of them of each of such corporations
desiring to consolidate may enter into an agreement signed by
them describing the terms and conditions of consolidation, the
mode of carrying the same into effect and stating such other
facts as are necessary to be stated in articles of incorporation
or in accordance with this law, as well as the manner of
converting the shares of each of the old corporations into
shares of the new corporation with such other details and
provisions as are deemed necessary or desirable.
The agreement may provide for the distribution of cash,
notes or bonds in whole or in part, in lieu of stock, provided,
however, that upon such distribution the liabilities of the new
corporation including those derived by it from the constituent
corporations and including the amount of capital to be issued by
the consolidated corporation pursuant to the terms of the
consolidation shall not exceed the value of the assets of the
The agreement of dissolution shall be submitted to the
stockholders of each constituent corporation at a meeting
thereof called specially for the purpose of considering the
same, in the manner required by Articles 40 to 43 of this law
and at said meeting said agreement shall be considered and a
vote taken for the adoption or rejection of the same.
Unless the articles of incorporation otherwise provide, if
the votes of stockholders of each corporation representing a
majority of the shares entitled to vote thereon shall be for the
adoption of said agreement, then that fact shall be certified on
said agreement by the Secretary or Assistant Secretary of each
corporation; and the agreements so adopted and certified shall
be signed by the President or a Vice-President and Secretary or
Assistant Secretary of each of said corporations in the manner
and in accordance with the requirements specified in Article 2
of this law with reference to the execution of articles of
The agreement of consolidation so executed shall be filed
for registration in the Mercantile Registry as required in the
case of articles of incorporation and when so filed shall be the
agreement and act of consolidation of said corporation.
When such agreement of consolidation is executed and filed
as required by the two preceding articles, the separate
existence of the constituent corporations shall cease and the
consolidating corporations shall become a single corporation in
accordance with said agreement possessing all the properties,
rights, privileges, powers and franchises and subject to the
restrictions, obligations and duties of each of the consolidated
corporations; provided that all rights of creditors and all
liens upon the property of either of the consolidating
corporations shall be preserved unimpaired, but such liens shall
be limited to the property affected thereby at the time of
consolidation; and all debts, liabilities and duties of the
consolidating corporations shall pertain to the consolidated
corporation and may be enforced against it to the same extent as
if they had been incurred by it.
The articles of incorporation of any corporation may provide
and determine the conditions, in addition to the requirements of
this law upon which such corporation may consolidate with any
In any judicial or administrative proceeding pending by or
against the corporations that have ceased to exist, or any of
them, the new corporation may be substituted in their place.
The liability of corporations or the stockholders or
officers thereof, or the rights or remedies of the creditors
thereof or of persons doing or transacting business with each
corporation shall not in any way be lessened or impaired by the
consolidation of two or more corporations under the provisions
If the Board of Directors deem it advisable that any
corporation organised under this law should be dissolved, the
Board within ten days after the adoption of a resolution to that
effect by a majority of the whole Board at any meeting called
for that purpose, shall cause notice of the adoption of that
resolution to be given in the manner provided in Articles 40 to
43 thereof, in a notice of a meeting of the stockholders having
voting power to take action upon the resolution so adopted by
the Board of Directors.
If at any such meeting the holders of a majority of the
shares entitled to vote shall by resolution consent that the
dissolution shall take place, copy of such resolution together
with a list of the names and residences of the Directors and
Officers of the company, certified by the President or a
Vice-President, and the Secretary or an Assistant Secretary, and
the Treasurer or an Assistant Treasurer, shall be executed,
protocolised and filed for record in the Mercantile Registry as
required in Article 6.
Upon such filing at the Registry Office a copy thereof shall
be published in one issue of a newspaper published in the place
where the office of the dissolved corporation was situated
within the Republic, or if there be no such newspaper then in
the Official Gazette of the Republic.
Whenever all the stockholders having voting power shall
consent in writing to a dissolution, no meeting of the Directors
or Stockholders shall be necessary for that purpose.
The document setting forth such consent should be
protocolised, registered in the Mercantile Registry and
published in the manner provided in Article 82 hereof. Once
these formalities have been complied with, such corporation
shall be deemed to be dissolved.
All corporations whether they expire by their own limitation
or are otherwise dissolved, shall nevertheless be continued for
the term of three years from such expiration or dissolution for
the purpose of prosecuting or defending suits by or against them
or enabling them to settle their business and dispose of and
convey their property and to divide their capital stock, but not
for the purpose of continuing their business for which said
corporation shall have been established.
When any corporation shall expire by its own limitation or
shall be otherwise dissolved, the Directors shall be trustees of
such corporation with full power to settle the affairs, collect
the outstanding debts, sell and convey the property of all kind,
and divide the monies and property among the stockholders, after
paying the debts of the corporation; and they shall have
authority to sue for, in the name of the corporation, and
recover debts and property and to represent it in proceedings
that may be initiated against it.
In the case of the foregoing article the Directors shall be
jointly and severally responsible for the debts of the
corporation, but only up to the amount of the monies and
properties which shall come into their hands.
The Directors shall have power to apply monies and property
of the corporation to the payment of a reasonable compensation
to themselves for their services, and to fill any vacancies in
The Directors when acting as trustees pursuant to Articles
86, 87 and 88, shall act by majority vote.
A foreign corporation may maintain offices or agencies and
carry on business in the Republic provided it files in the
Mercantile Registry the following documents for registration:
1. Deed of protocolization of its Articles of Incorporation;
2. Copy of its last balance sheet accompanied by a declaration
of the amount of its capital utilised or to be utilised in
business in the Republic;
certificate setting forth that it is incorporated and organised
under the laws of the country of its domicile certified by a
Consular representative of the Republic in said country, or if
there be no such representative then by that of a friendly
A foreign corporation (maintaining an office or carrying on
business in the Republic) which has not complied with the
requirements of this law may not bring judicial or any other
proceedings before any court or authority in the Republic, but
may be sued in any action before judicial or administrative
authorities, and shall furthermore be liable to a fine not
exceeding five thousand balboas to be imposed by the Secretary
of the Treasury.
A foreign corporation carrying on business in this Republic
and which has registered its articles of incorporation in the
Mercantile Registry as aforesaid, shall be required to register
in such Registry all amendments of such articles of
incorporation and the instruments of consolidation or
National or foreign corporations established or having
agencies or branches in the Republic at the time that this law
comes into effect shall be governed insofar as referred to the
contracting parties, by their articles of incorporation, their
by-laws and the laws in force at the time of their incorporation
or of their establishment in the Republic, as the case may be.
National corporations organised before this law comes into
effect may at any time be governed by the provisions of this
law, for which purpose it shall be necessary that this fact be
set forth in a resolution adopted by the shareholders, which
resolution must be registered in the Registry Office.
The stockholders of local corporations actually dissolved but
not yet liquidated may, for the purpose of the liquidation, be
governed by the provisions of this article, provided that it is
so resolved by a number of stockholders not less than that
required by the document of its organisation to allow the
dissolution of the corporation before the expiration of the term
fixed for such corporation.
All the provisions now in force relative to corporations are
This law shall come into effect on the 1st day of April,