Overview

The Panama IBC is a popular choice for teams who prefer civil law for their place of registration.

Use Cases

Holding Company

The Panama IBC is a good option for a holding company in a civil law jurisdiction. It is commonly used to hold crypto assets, as well as other assets like real estate, stakes in other companies or as a IP holding company.

Proprietary Trading Company

The Panama IBC is also a good entity to use as a proprietary trading entity to trade your own crypto. This is solely for your own use as there it no option to upgrade this entity into an investment fund. For this a BVI Limited Company is better suited.

Token Issuance

Token issuance is another use case for the Panama IBC. As there are no VASP regulations there is no licensing needed to issue the token. So for teams who prefer civil law, the Panama IBC is the right option to issue the token.

Tax status

Panama has no taxes on foreign sources income. This means that any income made by the company outside of Panama won't be taxable. For business conducted within Panama taxes might be applicable.

Privacy

Similar to other jurisdiction, the directors of the Panama IBC's are part of the public record. Beneficiaries are not public.

Onboarding

Setting up a Panama IBC involves KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures as part of the due diligence process. For this we will need to know some information regarding the new company as well as a KYC and KYB check for all natural and corporate participants.

The following documents are required:

KYC Documents	KYB Documents
Certified Copy of Photo ID	Certificate of Formation
Certified Copy of 2nd Photo ID	Register of Directors
Certified Proof of Address	Register of Members
Professional Reference	Share Certificates
Resume that is up to date	M&AA
Source of Wealth declaration	Consent to act as Director

Online Form

After the Panama IBC is ordered you will receive a link to login to the Otonomos Dashboard. When you enter the dashboard you can start filling out the company application form to stage your company. In the company application form we will ask information about the new company. The following information will be requested:

Company Name Options
Purpose of the entity
Country
Source of Funds
Financial Year End
Legal Opinion (optional)
Org Chart (optional)
Nominee Participants (if applicable)
Corporate Participants (if applicable)
Natural Participants
Share Capital
Share distribution
Corporate Participant Information

Required roles in the Panama IBC

The following roles will need to be filled in the Panama Foundation

At least 1 Shareholder
3 Directors
- Treasurer
- President
- Secretary
Ultimate Beneficial Owner (UBO)

The treasurer, president and secretary are combined roles of the director(s). Unlike the Panama Foundation, the Panama IBC does need 3 directors, also if there is a corporate director.

While 3 directors are needed at all times, it is still advisable to appoint nominee directors.If needed, you can also hire Nominee Directors from Otonomos.

Once this is all declared, you move on to the KYC verification process.

KYC Verification Process

The KYC Verification process is very straight forward and smooth thanks to our friends at SumSub. After submitting the online form with all the new company information all natural participants will receive a KYC invitation to upload the needed documents along with the required information.

Entity Maintenance

Renewal Periods

Panama IBC's have two renewal periods each year:

1st Semester: Entities registered between January and June need to renew by July 15th.

2nd Semester: Entities registered between July and December need to renew by January 15th.

To maintain your Panama IBC’s good standing, ensure timely renewal payments to avoid penalties.

Reporting

It is mandatory to file yearly financial statements in Panama. These statements must be submitted with the renewal of your entity to ensure the renewal process is completed smoothly. These financials do not need to be audited.

Shutting down your entity

Company Dissolution: To properly close down the entity, you should file for company dissolution. This ensures that the entity is shut down correctly without any loose ends.

Company Strike Off: Alternatively, an entity can be struck off if it fails to pay renewal fees or submit the required statements. This process is less formal and occurs when the entity does not meet compliance requirements.