Comparative: P.L.C. Vs L.T.D. in Panamá 

Public Limited Companies (P.L.C.) and Limited Companies (L.T.D.) in Panama share many characteristics. Despite their similarities, there are key differences that can make one more suitable than the other depending on your specific situation. Understanding these distinctions will help you choose the best structure for your company.

Differences

• Number of Shareholders or Partners: An L.T.D. must have at least two (2) partners, while a P.L.C. has no minimum requirement for shareholders.

• Transferability of Ownership: In an L.T.D., participation quotas are not considered negotiable instruments, unlike a P.L.C., where shares can be transferred privately —either by physically delivering bearer shares or endorsing certificates for registered shares.

• Management Structure: An L.T.D. requires at least one (1) manager, who may be a natural or legal person of any nationality. A P.L.C., however, must have a board of directors composed of at least three (3) natural persons.

• Abbreviations: A Limited Company is identified as L.T.D., whereas a Public Limited Company may use P.L.C., Inc., or Corp.

Similarities

• In both structures, the share capital does not need to be paid or released; it is represented by shares or participation quotas. 

• Both offer limited liability protection, as each is a separate legal entity, and owners are liable only up to their investment amount. 

• Both structures can be used for offshore purposes, enjoying the same tax advantages.

• Each must pay an annual flat tax of USD 300.00 to remain in good standing with the Panamanian government.
  
  

What Are Public Limited Companies and Limited Companies?

To better understand the P.L.C. vs. L.T.D. dilemma, it’s important to define how both structures work.

• Public Limited Companies (P.L.C.):  P.L.C.s are among the most common business structures in Panama and worldwide. Ownership is divided into shares that can be bought or sold. The term “public” refers to the possibility of keeping shareholders’ identities confidential if desired. There is no minimum number of shareholders, and shares can be privately transferred, providing great flexibility. They are identified by the abbreviations P.L.C., Inc., or Corp.

• Limited Companies (L.T.D.):  L.T.D.s are popular among small and medium-sized enterprises. Ownership is divided into participation quotas, which are not negotiable, meaning they cannot be easily sold like P.L.C. shares. They require a minimum of two partners and at least one administrator (a natural or legal person of any nationality). They are identified by the abbreviation L.T.D.

In both cases, the company is a separate legal entity, and the owners’ liability is limited to their contribution.

Key Differences Between P.L.C. and L.T.D.

Although P.L.C.s and L.T.D.s share similarities, there are key distinctions that can determine which is best for your business:

• Number of Partners: An L.T.D. requires at least two; a P.L.C. has no minimum.

• Transferability: L.T.D. quotas are not negotiable; P.L.C. shares can be transferred privately. 

• Management: L.T.D.s need one administrator; P.L.C.s require a three-member board of directors. 

• Abbreviations: L.T.D. vs. P.L.C., Inc., or Corp.

Key Similarities Between P.L.C. and L.T.D.

• Capital in both cases is representational, not necessarily paid. 

• Both provide asset protection to shareholders or partners. 

• Both can operate for offshore purposes, enjoying equal tax advantages.

• Both must pay the annual flat tax of USD 300.00 to stay compliant.

Which Structure Is Best for Your Business?

The choice between a P.L.C. and an L.T.D. depends on your goals and operational needs.

Key Factors to Consider:

• Ownership Transfer Flexibility: If you expect to sell or transfer shares privately, a P.L.C. is ideal. 

• Number of Partners: If your business will have one owner or a few partners, an L.T.D. may be more suitable.

• Privacy: If owner anonymity is important, a P.L.C. provides higher confidentiality.

• Administrative Simplicity: An L.T.D. offers a simpler structure with fewer formalities.

There is no one-size-fits-all answer. Some companies value the flexibility and anonymity of a P.L.C., while others prefer the simplicity and control of an L.T.D.

At Panamá Legal Lab, we help you choose the structure that best aligns with your business objectives and ensures your long-term success. As experts in corporate formation in Panama, we guide you through every step of the process.