Corporate governance in Panama: key practices to strengthen business transparency

Diego Lacayo Krupnik

Current challenges in corporate management in Panama

In a highly competitive and regulated business environment, companies in Panama must demonstrate transparency, professionalism, and institutional strength.

Corporate governance has evolved from a voluntary concept to a fundamental pillar for building trust among investors, banks, strategic partners, suppliers, and authorities.

A strong system contributes to business sustainability, reputation, and continuity.

Why Corporate Governance Is Essential for Modern Companies

Adopting good corporate governance practices is not only about legal compliance:
it is a real competitive advantage.

A well-designed system allows companies to:

  • Improve operational efficiency
  • Reduce legal, financial, and reputational risks
  • Voting and decision-making procedures
  • Streamline decision-making
  • Strengthen investment and financing attraction

Modern corporate governance integrates ethics, control, strategy, and oversight.

Six Core Pillars of Corporate Governance in Panama

1. Board Structure and Effective Leadership

A strong governance framework begins with a professional and balanced board of directors.

Key elements:

  • Mix of executive and independent directors
  • Clear separation of roles (Chairman vs. CEO)
  • Specialized committees (audit, risk, compliance, remuneration)
  • Succession planning and decision-making protocols

A well-structured board ensures strategic direction, oversight and long-term continuity.

2. Transparency, Disclosure and Internal Controls

Transparency is the foundation of stakeholder trust.

Relevant and timely information must be disclosed, including:

  • Financial statements
  • Risk management practices
  • Ultimate beneficial owners
  • Corporate structure
  • Administrative or strategic changes

Strong disclosure practices reinforce investor confidence and improve access to banking and financial partners.

3. Shareholder Agreements: Stability and Governance

Shareholder agreements are powerful tools to prevent disputes and protect business continuity—even though they are not legally mandatory.

They define:

  • Rights and obligations of shareholders
  • Entry and exit rules
  • Voting and decision-making procedures
  • Conflict-of-interest rules
  • Mechanisms to prevent internal disputes

A well-crafted agreement gives the company stability, order and governance clarity.

4. Risk Management, Due Diligence, and KYC/KYB

Proactive risk identification is essential for sustainable growth.

Good practices include:

  • Due diligence for suppliers, investors and strategic partners
  • Verification of beneficial owners and corporate structure
  • Strong KYC/KYB onboarding procedures
  • Updated operational, reputational, regulatory and cyber risk matrices

These processes do more than meet regulations—they protect the company and strengthen institutional credibility.

5. Regulatory Compliance: Beyond AML

Compliance is a core component of corporate governance—not just an AML requirement.

A comprehensive program should include:

  • Code of ethics and conduct
  • Anti-corruption and anti-fraud policies
  • Sector-specific compliance (finance, construction, retail, energy, logistics, etc.)
  • Data protection and cybersecurity
  • AML standards under Law 23 of 2015 and Law 254 of 2021

Compliance improves transparency, mitigates risk, and increases trust with regulators and the financial system.

6. Internal and External Audits: Independent Verification

Audits should not be viewed as obligations but as strategic tools.

Audit benefits include:

  • Early detection of operational and financial weaknesses
  • Process and control improvements
  • Independent evaluation of corporate integrity
  • Increased confidence from banks and investors

Companies that audit themselves regularly demonstrate seriousness, professionalism and solid risk management.

How LAC Legal Strengthens Corporate Governance for Businesses

At LAC Legal, we support Panamanian and international companies in implementing robust, transparent and globally aligned governance systems.

Our services include:

  • Development of corporate compliance and ethics programs
  • Drafting shareholder agreements and governance protocols
  • Due diligence, risk assessments, KYC/KYB onboarding
  • Legal audits and regulatory reviews
  • Structuring boards of directors and oversight committees
  • Institutional strengthening and governance policies

Contact us for a tailored consultation on how to implement a strong, transparent and sustainable corporate governance model within your company.

Frequently Asked Questions (FAQs) about Corporate Governance in Panama

What is corporate governance?

A system of rules, processes and practices that directs and controls a company, ensuring transparency and accountability.

Why does my company need corporate governance?

It reduces risks, improves efficiency, strengthens transparency and increases investor confidence.

Which laws regulate corporate governance and compliance in Panama?

Mainly Law 23 of 2015, Law 254 of 2021 and SSNF regulations.

Which companies must comply with SSNF supervision?

Law firms, accounting firms, real estate companies, casinos, jewelry businesses, fiduciaries, and other obligated entities.

What risks does a good governance system prevent?

Corruption, fraud, regulatory sanctions, internal conflicts, and reputational damage.

Are shareholders’ agreements mandatory?

No, but they are highly recommended to prevent disputes and ensure continuity.

Why are due diligence and KYC important?

They protect the company from legal, financial, and reputational risks.

What role do internal audits play?

They ensure control, continuous improvement, and external confidence.

What should a modern compliance program include?

Ethics, fraud prevention, data protection, sector regulation, and AML controls.

Can LAC Legal implement a complete governance system?

Yes. We design and execute comprehensive governance and compliance structures tailored to each company.

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