THE FUNDAMENTAL DIFFERENCES BETWEEN A PANAMANIAN CORPORATION AND A COMPANY OF THE BRITISH VIRGIN ISLANDS

By: Miriam Amores Correa

The main differences between these two jurisdictions are the following:

  
 
1.  Panamanian Corporations' law was enacted in 1927 and amended in 1997 to allow corporations to adopt modern practices, such as, the possibility of holding Board meetings using telecommunications' media.  BVI enacted its IBC (International Business Company) ordinance in 1984 which was abolished and, now, all BVI companies are regulated by the BVI BC ordinance since 2007.

 
 2.  Panamanian corporations can issue bearer shares, and the stockholders can have their custody. 
 
Companies organized from 1st January 2005 in the British Virgin Islands can issue bearer shares; nonetheless, shareholders cannot keep said certificates since they must be delivered to custodians authorized by the British Virgin Islands authorities.  Shareholders of companies organized before 2005 can maintain their bearer shares but must deposit them with a custodian not later than 31 December 2010.

  
3.  The annual franchise tax of Panamanian corporations with bearer or nominative shares is of US$250.00 for the first year and US$300.00 for subsequent years.

 
BVI corporations organized from 1st January 2005 with bearer shares must pay an annual franchise tax of US$1,100.00, and corporations with nominative or bearer shares organized before 2005, as well as corporations with nominative shares organized from 1st January 2005, pay an annual franchise tax of US$350.00. 
 
 4.  Panamanian corporations must have three natural persons or one or more corporations acting as Directors and their names must be recorded in the Public Registry.

  
BVI corporations can have one Director only and the recording of the name of the Director is optional. 
 
 5.  The Law on Panamanian corporations allows the recording of general powers of attorney in the Public Registry; however, said registration is not mandatory. 

Companies' law of the British Virgin Islands does not accept the recording of general powers of attorney in the Tortola Registry.

 
6.  Panama has no tax treaties with any country, while BVI has tax treaties with the European Union and the United States of America.

 
7.  Dissolution of a Panamanian Corporation does not require prior liquidation, while BVI corporations require liquidation before dissolution.

 
It is advisable to verify that Panamanian Corporations or BVI companies are not subject to a taxable penalty under the jurisdiction where they are going to be used. 

8. Registration of a Panamanian corporation and a Certificate of Good Standing (necessary for opening bank accounts) both sealed with the Apostille takes one week.  

Registration of a BVI company and certificate of Good Standing with the Apostille takes more than two weeks.

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