Countries › Panama › Guide › 15. Exiting › Who pays after exit: director, liquidator and shareholder liability in Panama

Who pays after exit: director, liquidator and shareholder liability in Panama

Last verified: 2026-10-29 · Status: Stable

Directors who approve dividends or capital reductions that leave assets below liabilities plus capital answer jointly to creditors, and during a winding up S.A. directors are liable for company debts up to the assets they handled. SRL managers answer to the company, partners and third parties for fault, wilful misconduct or negligence, jointly if several; partners risk only their contribution. In share sales the issuer is jointly liable for unpaid capital gains withholding, and in insolvency directors of the prior two years can have assets attached.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates freely as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Seller's joint liability for prior labour debts after a business transfer	1 yearsCódigo de Trabajo art. 14, as of 2026-10-29 · in force
Look back for attaching assets of former directors in insolvency	2 yearsLey 12 de 2016 art. 139, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. Directors who consent, knowing the effect on capital or the falsity, to a dividend or asset distribution that reduces assets below liabilities including capital, to a reduction of capital, or to a materially false statement or report, are jointly and severally liable to creditors for the resulting damage.Ley 32 de 1927, art. 64, 1927-02-26 official text · verified 2026-10-29

2. When an S.A. ends by expiry or dissolution, its directors act as trustees and are jointly and individually liable for company debts, but only up to the amount of the assets and funds they took into their possession and management.
Example: Directors who handled B/.200,000 of company assets in a winding up are liable for unpaid debts up to B/.200,000. / Exposure capped at US$200,000.Ley 32 de 1927, arts. 86 and 87, 1927-02-26 official text · verified 2026-10-29

3. SRL managers, partners or not, answer to the company, the partners and third parties for damage caused by fault, wilful misconduct or negligence, breach of law, the pacto social or company resolutions, or poor performance; several responsible managers are jointly liable. Each partner's liability for company obligations is limited to its contribution made or promised.Ley 4 de 2009, arts. 43 and 25, 2009-01-09 official text · verified 2026-10-29

4. If the buyer of shares fails to withhold and remit the 5 percent advance on capital gains, the issuing company is jointly liable for the unpaid tax. Transferor and transferee of registered shares are jointly liable for sums owed to the company on the shares transferred.Código Fiscal art. 701 literal e as worded by Ley 18 de 2006 art. 2; Ley 32 de 1927 art. 29, art. 701 literal e; Ley 32 art. 29, 2006-06-19 official text · verified 2026-10-29

5. The former employer remains jointly liable with the new employer for labour obligations arising before a business transfer for one year from written notice to workers, and indefinitely until notice is given.Código de Trabajo, art. 14, 1971-12-30 official text · verified 2026-10-29

6. In a concurso liquidation the liquidator may sue directors, officers, managers, auditors and liquidators without shareholder approval, and the court may attach assets of those in office in the two years before the order where negligent or fraudulent conduct is likely.Ley 12 de 2016, art. 139, 2016-03-19 official text · verified 2026-10-29

7. Withholding agents who have withheld are solely responsible to the tax authority for the amounts withheld, and jointly liable with the taxpayer when withholding was partial.Ley 76 de 2019, Código de Procedimiento Tributario, art. 49 numeral 7, 2019-02-13 official text · verified 2026-10-29

Step by step

Before any distribution or capital reduction, document that assets exceed liabilities plus capital.
In a winding up, pay or reserve for all known debts before distributing to shareholders.
In share sales, require proof of the buyer's 5 percent remittance to protect the target.
Keep minutes and financial statements that show directors acted on accurate information.

Common traps

Nominee directors are not shielded: the statutory liability attaches to directors who consented.
Trustee liability in a winding up is capped by the assets handled, so directors who take control of more assets carry more exposure.
Former directors remain exposed in insolvency for two years after leaving.

Sources

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