admin14In Panama, the division of companies was adopted through the issuance of Law No. 85 of November 22, 2012, which modifies the Commercial Code.
The division consists of the division or partial or total separation of the patrimony or capital (including assets, liabilities and capital) of a company, either to other existing companies or to new companies. With this, the segregation or transfer of assets of a company (called “spun-off company”) to the company or companies acquiring or benefiting from said assets is obtained.
The law allows a company (regardless of whether it is anonymous, RL, Limited, etc.) can be divided basically in three ways:
- By dividing all or part of your assets;
- Through the transfer of the same to another or other companies already constituted; or,
- Through the transfer, in any case, of its assets to a recently created or incorporated company.
The companies to which part or all of the assets of the spun-off company will be transferred will be called beneficiary companies, which must have the same partners or shareholders of the spun-off company or may have this company as their partner or shareholder.
Regarding the obligations acquired as a result of the spin-off, as of their registration in the Public Registry, the beneficiary company or companies will assume all the obligations based on the agreements established in the Shareholders’ Act that authorized the spin-off, also acquiring the rights , Privileges inherent to the patrimonial part that has been transferred to them in the same way and from the same time in which they were acquired by the spun-off company, under the same terms and conditions.
In tax matters, the transfer of the assets resulting from the spin-off will not be considered a sale or alienation provided that said transfer is for the same value as said assets in the books or accounting records of the spun-off company and the beneficiary companies have the same partners or shareholders as the spun-off, or have it as their shareholder.
The beneficiary company or companies will be jointly and severally liable with the spun-off company, in matters of taxes, advances, withholdings, penalties and interests and other fiscal obligations that are enforceable at the time of the split.
It is important to consider that the company that will be the object of a division must notify the General Directorate of Revenues of the Ministry of Economy and Finance of its intention to divide before starting the process. After the notification has been made, the process may be initiated before the Public Registry by registering the corresponding Public Deed. If the companies benefiting from the spin-off do not exist at the time of notification to the DGI, their articles of incorporation must be submitted for prior approval.
After registering, the corresponding update must be made before ANATI and the General Directorate of Revenues, in the case of real estate, in order to reflect the new owners of the assets.