Mining Investments in Panama

by Pardini, de la Guardia & Lachman

Setting up Operations

Panamanian law recognizes the following forms of legal entities:

• General partnerships
• Limited partnerships
• Stock-issuing limited partnerships
• Cooperative companies
• Corporations (including joint venture corporations)
• Branches of foreign corporations

The two most advisable forms for structuring a foreign mining investment are a corporation (or subsidiary) and a branch of a foreign corporation.

Corporation

Usually, a Panamanian corporation is formed as a wholly-owned subsidiary of a foreign corporation or as a joint venture corporation for a specific project. Mere joint ventures do not have a legal identity separate from the joint ventures under Panamanian law.

Main Advantages

• Two or more persons of any nationality, even though not domiciled in Panama, may organize a corporation for any lawful purpose. The articles of incorporation may be executed inside or outside Panama, and in any language.
• Ownership of a corporation in Panama may reside in a single individual or corporation, and it is not required that any part of the capital be held by Panamanians. There are no nationality or residence requirements for shareholders, directors or officers of a Panamanian corporation.
• Neither the directors nor the officers are required to be shareholders.
• The board of directors must be composed of at least three directors, but one person may hold more than one position as officer. It is recommended that mining corporations have a Panamanian director or attorney-in-fact duly empowered to act as its legal representative before the Panamanian authorities.
• Meetings of shareholders or directors may be held outside Panama. Proxies may be used by shareholders or directors.

Branch of a Foreign Corporation

A foreign corporation enjoys most of the aforementioned advantages and may have branches or offices and engage in business within Panama after filing the following registration documents at the Corporations’ Registry:

• Notarial instrument of the protocol of its articles of incorporation. This document must be a certified copy of its original and must be issued by the corresponding Corporations’ Registry of the country of incorporation. It must then be legalized by the Consulate of Panama.
• Copy of its last financial statement together with a declaration of the corporate capital to be utilized or intended to be utilized in the operations in Panama. This document must be issued by the Corporate Secretary or an authorized officer, authenticated by a notary public and legalized by the Panamanian Consulate.
• A certification that the foreign corporation is organized in accordance with the laws of its country of incorporation. This certification must be issued by the Corporation’s Registry or other competent authority of the country of incorporation. The respective Consulate of Panama, based upon said certification, then certifies that the foreign corporation is duly organized and in existence pursuant to the laws of its country.
• A list of the current directors and officers of the foreign corporation. This document may consist of a Certificate of Election containing an extract of the directors or shareholders meeting at which the current directors and officers were elected. This certificate must be issued by the corporate secretary, authenticated by a notary public and legalized by the Consulate of Panama.
• A power of attorney for the firm that represents the foreign corporation in Panama. This power must be granted by its corporate secretary or legal representative, authenticated by a notary public and legalized by the Consulate of Panama.

The law firm of Pardini, de la Guardia & Lachman is located in Panamá, Panamá. Its practice areas include corporate, commercial and mining.