What to Do When a Shareholder Passes Away in a Corporation in Panama?

In Panama, corporations are governed by the Commercial Code and other specific laws, such as the General Corporations Law. When a shareholder passes away, their shareholder rights usually become part of their estate. This means that the rights and obligations tied to the shares are transferred to their heirs according to Panama’s inheritance laws. However, this process can be complex.

The key considerations include:

• Identifying the legitimate heirs.
• Reviewing the corporation's bylaws to determine any restrictions or specific procedures.
• Compliance with the Public Registry requirements in Panama.

Understanding these essential elements will help all parties navigate the process more efficiently.

Properly handling the passing of a shareholder involves following a series of legal steps to ensure compliance and business continuity:

1. Obtain the Death Certificate

The death certificate is the essential document needed to initiate the transfer process, as it will be required for most legal and inheritance-related procedures.

2. Verify Legal Documents

Determine whether the deceased left a will or any instructions regarding the management of their assets, including corporate shares.

3. Review Corporate Bylaws

The corporation’s bylaws may contain provisions regarding the death of a shareholder. Some corporations have clauses that restrict share transfers to heirs or require approval from other shareholders.

4. Identify the Heirs

Establishing the legitimate heirs of the deceased shareholder is necessary for transferring the shares. This may involve legal procedures with the Public Registry of Panama.

When handling succession and inheritance in Panama, it is crucial to adhere to local laws:

• Public Registry: The transferred shares must be duly registered and updated with the Public Registry of Panama.
• Taxes: Heirs may be subject to inheritance or asset transfer taxes, depending on the circumstances.
• Legal Assistance: Consulting a legal expert in corporate and inheritance law ensures that the process is conducted transparently and in compliance with current regulations.

Once the share transfer is formalized, it is essential to update the legal records in the Public Registry of Panama. This ensures the validity of the process and helps prevent future legal disputes. Key actions include:

• Officially notifying the corporation about the change in share ownership.
• Registering the new shareholders in the corporate records.
• Amending legal documents if necessary.

This process may require the assistance of a specialized attorney to ensure proper execution.

In addition to legal and corporate aspects, it's important to consider the implications fiscal and property that may arise after the death of a shareholder. Key factors to evaluate include:

• Possible taxes on the transfer of shares.
• Responsibilities of the company in relation to inherited assets.
• Estate planning to avoid future disputes.

An appropriate tax and estate planning strategy can help protect the assets of the company and the heirs.