Confusion regarding the Legal Representative in a Panamanian Corporation

• Published date: 17 January 2023
• Author: Rita de la Guarda
• Law Firm: Blogs Alemán, Cordero, Galindo & Lee

Confusion regarding the

Legal Representative in a

Panamanian Corporation

Legal representatives and power of attorneys are

natural or legal persons to whom specif‌ic man-

dates have been given to act on behalf of ano-

ther person. However, both f‌igures have signif‌i-

cant dierences that aect their range of action

and responsibility.

In Panama, the administration of a Panamanian

corporation is carried out by its Board of Direc-

tors, except when the articles of incorporation

of that specif‌ic company establish otherwise or

expressly deal with issues that, by law, are reser-

ved for the decision-making of the shareholders.

The board of directors of a corporation can

delegate powers of attorney to others through

the issuance of special or general powers. In the

absence of such powers, the Board of Directors

is responsible for carrying out the functions of

administration or directly authorizing others to

represent them to perform specif‌ic acts via a

corporate resolution (which can take place via

a meeting or via unanimous written consent),

whether signing a contract or opening bank ac-

counts, among others.

It should be noted that the Panamanian Corpo-

ration Law contemplates the f‌igure of the Legal

Representative of the Panamanian Company but

does not def‌ine its function clearly. This being

so, although the articles of incorporation of a

Panamanian corporation typically set forth that

the president of the company exercises the legal

representation of the company unless the arti-

cles of incorporation expressly def‌ine the func-

tions and powers of said legal representation, such

person is not authorized to bind the company or

to act on its behalf.

There is much confusion as to the legal representa-

tive’s powers. While it is common to see counter-

parties requiring that the legal representative sign

a particular document or contract, the role of the

legal representative of a Panamanian corporation,

by law, is minimal. Under a provision contained in

the Judicial Code of Panama, it is established that

the legal representative of a company may be no-

tif‌ied of a process involving the company, which in

turn may grant powers on behalf of the company

to a third party to attend such process. Howe-

ver, the legal representative is only empowered

to perform acts of disposition or enter into con-

tracts that legally bind the company if he has the

express authorization from the board of directors

to do so or the articles of incorporation expressly

confer specif‌ic powers to the legal representative.

Author:: Rita de la Guarda partner in Alcogal