Merger of Corporations in Panama

• Published date: 19 July 2022
• Author: Cristina de Alba
• Law Firm: Blogs Alemán, Cordero, Galindo & Lee

The merger agreement must be approved by

the shareholders of each corporation, and the

corresponding minutes containing the approval

resolutions are formalized together with the

merger agreement in a public deed, which is re-

gistered in the Public Registry of Panama.

The merger of corporations is a juridical operation that

is frequently performed in Panama, by which two -or

more - companies become a single entity. It can be

done by integration (a new corporation is formed that

acquires the assets of the initial corporations) or by

absorption (one of the companies absorbs the others,

integrating their assets into the surviving company). In

both cases, except for the surviving company in a mer-

ger by absorption, the original corporations cease to

exist as a result of the merger.

In order to register the merger, the directors of the

merging companies must execute a merger agreement

detailing the terms and conditions of the merger, how

it will be carried out, and the manner by which the

shares of each of the companies will be converted, as

well as including other provisions that may be required

in accordance with applicable law. The merger agree-

ment must be approved by the shareholders of each

corporation, and the corresponding minutes contai-

ning the approval resolutions are formalized together

with the merger agreement in a public deed, which is

registered in the Public Registry of Panama. Registra-

tion of the merger agreement in the Public Registry is

necessary to perfect the merger, and results in that the

initial companies, except for the surviving company in

a merger by absorption, cease to exist individually.

In the case of a merger by absorption, all the assets,

rights, privileges, powers, and franchises, as well as

all the restrictions, obligations, and duties of the ab-

sorbed corporations, are transferred to the absorbing

corporation. It is also worth noting that the rights of

creditors and encumbrances corresponding to the

absorbed corporations will not be prejudiced by the

merger, but rather the absorbing corporation surviving

the merger assumes all the debts and obligations of

those companies being absorbed.

The registration of the merger does not eliminate the

need to take the necessary steps to transfer the assets

of the merged companies to the surviving company.

These transfers must comply with applicable require-

ments, according to the laws of the jurisdiction where

the assets are located. We recommend that our clients

seek advice in the relevant jurisdictions.

Of note: in cases where there are foreign companies

participating in the merger, it is necessary to register

these as foreign companies/branches in Panama, or to

redomicile them to Panama, if the jurisdiction of origin

allows it, in order to perform the merger.

Visita: www.focusalcogal.com

Merger of Corporations

in Panama

Author: Cristina de Alba Lawyer at Alcogal