Panama continues to attract international investment thanks to its business-friendly tax regime and strategic location. However, for companies needing to cease operations, understanding how to properly dissolve and liquidate a business is essential to ensure regulatory compliance and prevent future liabilities. This guide outlines the 2025 liquidation process for companies operating in Panama, with specific steps for Sociedad Anónima (S.A.) structures and other legal entities.
Key takeaways on how to liquidate a company in Panama
| 5 Steps to liquidate a company in Panama | For an S.A: Settle the pending company affairs. Collect the company credits. Sell or transfer company assets. Divide the assets of the company Initiate legal proceedings. |
| What is the timeframe needed to liquidate a company in Panama? | It should take approximately six months to a year liquidate a company in Panama, if everything is in order. The time limit is three years. |
| What reasons are there to liquidate a company in Panama? | These vary, but the key point is to stay compliant and in good standing with the authorities. |
| What causes involuntary liquidation in Panama? | Yes, under certain circumstances. Unpaid creditors can petition a court for dissolution. |
What is the process for liquidating a company in Panama?
Usually, the liquidation process of a company is established in the bylaws of the company, in private documents like general shareholders meetings or legal agreements. When the process is not established by previous private documents, the company will need to follow the process established in the commercial code of Panama.
Liquidation process for an S.A. company in Panama:
Once the company is dissolved, liquidation can begin. The company may continue operations during liquidation, with directors acting as trustees. The five formal steps are:
1. Settle the Pending Company Affairs Notify service providers, close vendor accounts, terminate contracts, and resolve outstanding financial or operational obligations. Ensure payroll and severance compliance for any last active staff.
Recommendation: Create a closure checklist and assign internal stakeholders or your legal advisor to supervise all steps.
2. Collect the Company Credits Recover all outstanding payments from clients, partners, or debtors. Ensure documentation of all receivables is up to date.
Tip: Prioritize high-value debts early and send formal legal notices to debtors where appropriate.
3. Sell or Transfer Company Assets Dispose of office equipment, inventories, real estate, and intangible assets. Obtain independent valuations and retain invoices or notarized transfer documents.
Note: Cross-check asset sales with accounting records to ensure consistency and transparency.
4. Divide the Assets of the Company Once liabilities are settled, distribute remaining assets to shareholders in accordance with shareholding percentages. This step must be documented formally and registered where necessary.
Recommendation: Keep a ledger of asset allocations to shareholders to assist with final filings and prevent disputes.
5. Initiate Legal Proceedings Submit all supporting liquidation documents to the Public Registry and DGI. This includes dissolution proof, final balance sheet, tax compliance certificates, and the request for RUC cancellation. Maintain records for five years post-closure.
Client Insight: Late RUC cancellations have triggered tax obligations. Always obtain written confirmation of cancellation from DGI.
How to liquidate other legal entities in Panama?
1. Appointment of Liquidator Shareholders must petition the court for the appointment of a liquidator, whose details are registered with the Public Registry.
2. Handover of Records Administrators hand over corporate documents, ledgers, contracts, and asset records to the liquidator.
3. Asset and Debt Assessment Within 60 days, the liquidator must prepare and present an opening balance sheet that includes liabilities and company property.
4. Creditor Claims Period Creditors have a minimum of 60 days to submit claims. Announce this via official notice or gazette publication.
5. Final Report to Shareholders Liquidator presents a comprehensive final report covering:
- Detailed asset/liability overview
- Proof of debt settlement
- Recordkeeping procedures
- Full liquidation accounting
6. Registry Filing Final liquidation documents must be approved by shareholders and registered to close the entity formally.
How to dissolve a company in Panama?
Before you can liquidate the assets of your company in Panama, you must first go through a dissolution process complying with all governmental authorities, The government entities responsible for the dissolution of a company in PaTo begin the liquidation process, the company must first be officially dissolved. Dissolution is a formal procedure involving the following steps:
- Approval of dissolution through shareholder resolution
- Filing of the resolution with the Public Registry of Panama
- Registration of the dissolution with the National Tax Authority (DGI)
Responsible Authorities:
- Public Registry of Panama
- DGI (Dirección General de Ingresos)
- Ministry of Commerce and Industries (if the company conducted commercial activity)
- Caja del Seguro Social (for companies with employees)
Grounds for Dissolution Include:
- Situations defined in company bylaws
- Unanimous shareholder decision
- Fulfillment or impossibility of company purpose
- Merger or judicial order
Most dissolutions are voluntary, and formal registration is required before liquidation may begin.
What are the obligations of the liquidator during the liquidation process in Panama?
The liquidator is legally obligated to:
- Safeguard company assets and ensure appropriate use
- Present initial balance sheets to shareholders within 15 days of appointment
- Identify, quantify, and settle company debts
- Sell assets, collecting and distributing funds per law
- Maintain a formal liquidation ledger with transaction history
- Archive all records for at least five years
- Submit a monthly liquidation status report to shareholders
- Represent the company in any remaining contractual or judicial matters
- Finalize the liquidation and prepare filings for government agencies
Expert Tip: Choose a liquidator with legal and financial experience. Errors in filings or missed creditor claims can invalidate the process or lead to legal exposure.
FAQs for Liquidating an entity in Panama
Based on our extensive experience these are the common questions we receive from clients about liquidating an entity in Panama.
1. What is the process of liquidation in Panama?
For S.A.s:
- Resolve commercial affairs
- Collect receivables
- Dispose of assets
- Distribute remaining equity
- File closing documents
For other entities:
Final shareholder report and filing
Appoint a liquidator
Transfer records
Open balance review
Public creditor notification
2. How long does it take to liquidate a company in Panama?
Usually 6 to 12 months, depending on compliance. S.A.s have up to 3 years by law to complete the process from the time of dissolution.
3. What are the reasons to liquidate a company in Panama?
A company in Panama might go into liquidation in the following cases:
Business no longer active or profitable
Strategic withdrawal from the market
Legal restructuring or merger
Regulatory compliance
4. Can you be forced to liquidate a company in Panama?
Yes. Courts may order liquidation at the request of unpaid creditors.
5. What happens if a company fails to properly liquidate?
Accrual of late penalties or taxes
Legal exposure for directors
Barriers to future business formation in Panama
6. Can the company continue operating during liquidation?
Yes, in most cases S.A. entities may conduct limited operations during the liquidation phase to conclude existing affairs and finalize transactions.
Liquidate a company in Panama with Biz Latin Hub
Liquidating a company in Panama involves regulatory filings, legal compliance, and procedural accuracy. At Biz Latin Hub, our bilingual legal and accounting team provides full-service support for your business liquidation, including dissolution, asset transfer, tax clearance, and final registration.
Contact us today to ensure a smooth and compliant closure of your Panamanian company.
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