How to make an Amendment of the Articles of Incorporation of a Panamanian Corporation with Delvalle & Delvalle

In Panama’s dynamic and attractive business world, adaptability and constant growth are essential. Whether you are in charge of a thriving corporation or planning to transform your business, it is vital to understand the legal mechanisms that govern its operations. A crucial aspect of this legal framework is the Articles of Incorporation, a document that establishes the fundamental rules under which the corporation operates. However, as your business evolves, these articles may need to be modified to align with new challenges and opportunities.

Modifying the Articles of Incorporation in Panama may seem daunting, but it can be a straightforward and efficient process with the right guidance. This is where Delvalle & Delvalle comes in, a law firm in Panama with extensive experience in providing offshore legal solutions. Our experts are ready to guide you through the legal maze, ensuring that your Panamanian corporation always aligns with your goals and business strategies.

What are the Articles of Incorporation, and how can they be modified?

The Articles of Incorporation are one of the essential documents in the formation of any Panamanian corporation. This document details the rules governing the corporation’s existence and operation, including its name, share capital, number of issued shares, the name and address of the board of directors, share distribution, rights and obligations of shareholders, and decision-making rules. In fact, it can be considered the corporation’s constitution, outlining its structure and governance.

However, the Articles of Incorporation are not a static document. In a rapidly changing business environment, it may be necessary to modify this agreement to adapt to new commercial realities, regulatory changes, or business strategies. According to Law 32 of Panamanian Corporations, the Articles of Incorporation can be entirely or partially modified. These modifications can include changes in the number of shares, their nominal value, voting rights, requirements, and privileges, among other aspects. The process of modifying the Articles of Incorporation in Panama requires complying with a series of legal steps and conditions, which we will discuss in more detail in the following sections.

Steps for Modifying the Articles of Incorporation

1. To modify the Articles of Incorporation of a Panamanian corporation, it is important to follow a series of steps to ensure the modifications’ legality and effectiveness. At Delvalle & Delvalle, lawyers in Panama with extensive experience in these matters, we have designed a process that complies with the rules established by Law 32 of Panamanian Corporations.
2. The first step to modify the Articles of Incorporation in Panama is to convene an Ordinary or Extraordinary Shareholders’ Meeting. This convocation is made through Shareholders’ Meeting Minutes and aims to discuss and vote on the proposed modifications to the Articles of Incorporation. It is important to remember that any changes to the Articles of Incorporation must be approved by the shareholders or their majority, who have the power to accept, reject, or propose modifications to the presented proposals.

Once the shareholders have agreed on the modifications, drafting the new Articles of Incorporation document begins, which must reflect all the approved changes. This document will be signed by the holders or agents of all subscribed shares with voting rights, by the President or one of the Vice Presidents, and by the Secretary or one of the Assistant Secretaries of the corporation.

It is important to note that any modification to the Articles of Incorporation cannot be made if the corporation has debts with the General Revenue Directorate of the Ministry of Economy and Finance in Panama. Therefore, before initiating any modification process, it is essential to ensure that all company financial obligations are up to date.

At Delvalle & Delvalle, lawyers in Panama, we understand that each company y has its own particularities and unique challenges. Our team of experts can guide you through this process of modifying the Articles of Incorporation, ensuring that all modifications are made in a legal and effective manner, and align with your company’s business strategies and objectives.

Procedures according to the status of share issuance:

It is important to note that the process of modifying the Articles of Incorporation of the company in Panama may vary depending on whether shares have been issued or not. Below is a list of procedures in each case:

• Amendments to the Articles of Incorporation before share issuance: If modifications to the Articles of Incorporation are agreed upon before the issuance of shares, these changes must be signed by those who initially subscribed to the articles and all those who have agreed to take shares in the company. This measure ensures that all initial participants are in agreement with the proposed changes before the shares are issued. This action is called “subrogation of the Articles of Incorporation.”
• Modifications to the Articles of Incorporation after share issuance: When shares have already been issued when making modifications to the Articles of Incorporation, the procedures change slightly. In this case, the holders or agents of all subscribed shares with voting rights must be subscribed to the changes. Similarly, the modification is made through shareholders’ or board meeting minutes (as applicable), which must be signed by the president and the company’s secretary. There is also the possibility of appointing an ad-hoc president and secretary to sign a specific minute. Additionally, a certificate authorizing the issuance of the modification document must be attached, authorized by the shareholders or their majority through a resolution adopted by the owners or agents of the majority of shares.
• Modifications to the Articles of Incorporation that alter the share capital and the preferences of subscribed shares: In situations where the modification of the Articles of Incorporation alters the aforementioned aspects, after its registration, a board meeting minutes must be held to authorize the issuance of new share certificates in accordance with the new modifications. The preferences of the subscribed shares of any class must be stated in the certificate mentioned above, or the authorization to issue shares with preferences more advantageous than those of the subscribed shares of any class must be stated. This is done through a resolution adopted by the owners or agents of the majority of the shares of each class with voting rights. This ensures that the preferences of the shares are adjusted fairly and equitably.

Each of these procedures has its nuances and legal requirements, and it is essential to manage them correctly to ensure the validity of the modifications to the Articles of Incorporation.

Reduction of Authorized Capital and Asset Distribution:

1. Reduction of Authorized Capital: In certain circumstances, a company in Panama may choose to reduce its authorized capital. This process involves decreasing the number of shares or their nominal value. However, this reduction cannot result in the distribution of its assets if it reduces the value of the assets to an amount lower than the total value of its liabilities. This point is critical to maintain the company’s financial soundness and fulfill obligations to creditors.
2. Asset Distribution: If the company decides to reduce its authorized capital and distribute its assets, the modification document must be accompanied by a certificate issued under oath by the President or Vice President and the Treasurer or one of the Assistant Treasurers. This certificate must certify that such distribution does not infringe the provisions of Law. This step is essential to demonstrate that asset distribution is carried out in accordance with relevant laws and regulations.

Why Choose Delvalle & Delvalle for this Process?:

Choosing the right team of lawyers to guide you through the process of modifying the Articles of Incorporation is essential. At Delvalle & Delvalle, lawyers in Panama, we offer comprehensive offshore legal services to international clients interested in taking advantage of Panama’s location as Latin America’s leading banking, financial, and business center.

Our team of experts is familiar with all the particularities of Law 32 Panama companies and has the necessary experience to guide your company through each step of the process of modifying the Articles of Incorporation. We pride ourselves on operating with the highest ethical and regulatory standards and always strive to achieve the best results for our clients.

We are here to help you navigate the process of modifying the Articles of Incorporation, and we are ready to answer any questions you may have. Please do not hesitate to schedule a consultation with our lawyers for more information. 

Services of Delvalle & Delvalle regarding the modification of the Articles of Incorporation:

At Delvalle & Delvalle, we offer a wide range of legal services related to modifying the Articles of Incorporation of companies in Panama. Our goal is to provide our clients with a comprehensive and hassle-free service, allowing them to focus on what they do best: running their companies. Here’s an overview of what we can do for you:

• Legal Advice: We will provide you with comprehensive consultation on all aspects of modifying the Articles of Incorporation. We will explain the changes allowed by Law 32, how they can be implemented, and their legal and financial implications. It is important to note that to modify the articles of incorporation of a company, Delvalle & Delvalle must be the resident agent of that company.
• Document Preparation: We prepare all the necessary documents for modifying the Articles of Incorporation, including the Shareholders’ Meeting Minutes, the required certificates, and the modification documents.
• Filing and Registration: We handle the filing and registering of all necessary documents with the appropriate authorities in Panama, ensuring that everything is done correctly and on time.
• Compliance with Legal Obligations: We assist you in complying with all legal obligations resulting from modifying the Articles of Incorporation, including paying any applicable taxes or fees. 
• Post-Modification Advice: Once the modification of the Articles of Incorporation is complete, we remain available for any additional questions or advice you may need.

At Delvalle & Delvalle, we take pride in offering personalized service that adapts to each client’s specific needs. Regardless of the complexity of modifying the Articles of Incorporation you wish to make, you can rely on us to guide you through the process efficiently and professionally. To learn more about our services, we invite you to schedule a consultation with one of our experienced lawyers.