Having both a Panamanian Foundation, and a Corporation, have very different characteristics i.e.:

1. While the paid-in capital is defined as the amount paid for the shares of a corporation, the authorized capital is the minimum value that can be given to the shares of the company and that is authorized by the Public deed of Constitution of the company itself.
2. While the paid-in capital corresponds to the funds paid by the shareholders (owners of the corporation) as evidence of their property, the authorized capital can be fully paid after the constitution of the corporation.(And not before it)
3. The paid in capital is also known as established capital or as subscribed capital whilst the authorized capital is also known as nominal capital. The Panamanian Corporations Law uses the term “Social Capital”, “Authorized Capital” and “Capital” indistinctevly.
4. The paid-in capital can as well be greater or smaller than the authorized capital, whereas the authorized capital previously is established in the Public deed of Constitution and can only be changed by an amendment of the Public deed of Constitution.
5. The paid-in capital is the one that the shareholders indeed have paid and has entered into the corporation. A corporation does not have to cover the total sum of its authorized capital.
6. It is necessary to establish the authorized capital in the Public deed of Constitution but not the paid-in capital.
7. In Panama, the Registry fees are paid according to the amount of the authorized capital and not the paid-in capital.

SOME DETAILS OF THE PANAMANIAN CORPORATIONS WITH RESPECT TO THE CAPITAL ARE:

The Panamanian law does not require for the authorized capital to be paid, subscribed or paid out. It also does not require a minimum or maximum amount for the authorized capital or the paid-in capital, nor a period in which they must be paid.

The paid-in capital and the authorized capital should both be differenced from the operating capital which consists on the present assets (like cash, inventory and accounts receivable) minus the present liabilities.

The authorized capital of a Panamanian corporation can be constituted of the following way:

1. Stocks with nominal value.
2. Stocks without nominal value.

Thess can be issued to the name of the stockholder (nominative stocks) or to the “bearer”.

It is not necessary that the amount of the authorized capital be deposited in a bank at the time of issuing the registered stocks. However for the stocks that are issued in bearer form, it is understood that this stocks have been paid-in, this means that at the moment of the issuance of these stocks there has to be an amount paid for them.

This is established by article No. 28 of the Panamanian Corporations Law:
“Stocks in bearer form will not be issued if they have not been fully paid and released”

The responsibility of the stock holders is limited to the sum of the capital that they have to contributed.
The sums paid in excess to the authorized capital constitute the “paid-in capital in excess” and although this is part of the work capital, it is not considered as part of the authorized capital.

We can find a clear difference between “patrimony” and “share capital” in a December 12, 2003, sentence dictated by the court that reads: “… the patrimony of a corporation is not the share capital, it is constituted by all the present and future assets that the corporation owns”

Having both a Panamanian Foundation, and a Corporation, have very different characteristics i.e.:

1. A Panamanian Corporation is allowed to pursue any commercial activity while a Panamanian Foundation is not established for that purpose.
2. When the client is of third age, who wants to organize its inheritance, a foundation is a way to do it, without loosing control of the assets during his/her live time.  The “regulation” is the instrument by means of which the founder expresses his/her will, in case that he/she dies.  The corporation is not an instrument that can be use to organize the inheritance of a person.
3. A Panamanian Corporation issues shares, meaning that the owner of such is the ones that have control over the corporation. A Foundation does not issue shares, meaning that the Foundation does not have owners that control it but it has beneficiaries.
4. A corporation has a foundation council while a corporation has directors and officers.
5. We would recommend a foundation when the only purpose of creating it is to protect the patrimony of its founder and in case of his/her dead, this patrimony will not be a part of an inheritance process. In conclusion, the patrimony of the founder and the patrimony of the foundation are totally separated from each other.
6. Regulations of a foundation can be given the same character as a will; the names of the beneficiaries of a foundation are never public since they do not appear in the Public Registry.

If you are interested in learning more on Panamanian Corporations please go to the following link: http://www.limayasociados.com/services.htm

If on the other hand you want to learn more on Panamanian Private Foundation please go to the following link: http://www.limayasociados.com/services2.htm

As of January 1st, 2010, the Memorandum of Association of every BVI company will be deemed to prohibit bearer shares.
To comply with the new BVI Business Companies Act, the following actions must be taken:

• Exchange bearer shares for registered shares, OR
• Immobilize bearer shares.

Those companies that wish to continue its existence in BVI and maintain bearer shares or the possibility of issuing them in the future will have to take the following steps:
1. Express your intention before 31 December, 2009, and
2. Immobilize all existing bearer shares with a licensed custodian. The custodian shall have the complete names of beneficial owners and their general information.
An alternative to bearer shares are to issue registered shares.

• Non-bearer share companies will pay minimum BVI license fees
• The shares may be registered under a corporation, foundation or trust. If these options are not suitable, you may consider transferring the domicile of the corporation, thus, maintaining its existence, to a jurisdiction that allows the issuance of bearer shares.

Please note that if the above mentioned steps are not taken before 31 December 2009, the existing bearer shares will be disabled.

We highly recommend you to inform us on your decision prior to 15 October 2009.

If you have questions regarding these changes, please do not hesitate to contact us.