Did You Know? In Panama, Corporations and LLCs Can Convert into Each Other

Published on Jan 30, 2026

Denise Littman and Vanessa Muentes, Corporate Director and Legal Assistant at ARIAS Panamá, respectively, both experts in Corporate Law, present this article on the transformation of companies as a legal and strategic mechanism.

In today’s corporate environment, companies face constant changes that require flexible and adaptable legal structures. Factors such as market conditions, company growth, the incorporation of new partners or investors, and the evolution of corporate strategy can lead business owners to reconsider the legal form of their company.

Panamanian law offers a solution to this need through company transformation, a mechanism that allows the type of company to be changed without losing its legal personality, assets, contracts, or seniority. This means that a Corporation (S.A.) can be transformed into a Limited Liability Company (S.R.L.), and vice versa, maintaining the legal and operational continuity of the business at all times.

The choice between an S.A. and an S.R.L. does not have to be permanent. As the company grows or adapts to new opportunities, it may become convenient to adjust its corporate structure. This decision will depend on factors such as the number of partners, expansion plans, the need to maintain certain confidentiality, and the most efficient way to organize the company’s daily administration.

Transformation Process

The mechanism of corporate transformation under Panamanian legislation allows companies to change their legal structure without altering their legal personality. This process ensures that the company retains all of its rights and commitments towards third parties.

  1. Approval from partners or shareholders: A formal resolution is required that respects both the terms of the Articles of Incorporation and any private agreements between partners/shareholders that are in force.
  2. Modification of the Articles of Incorporation: This involves the formal adjustment of the company’s Articles of Incorporation to reflect the new type of company, including changes to its name, capital, management bodies, among others.
  3. Registration with the Public Registry of Panama: Through the registration of the transformation, the change of corporate type gains full legal validity and effects in relation to third parties, publicly recording the company’s continuity and its rights and obligations.
  4. Updating corporate documents: This includes the registration of shareholders or partners, share certificates or participation quotas, and final beneficiaries, ensuring that all corporate information aligns with the new structure.
  5. Notification to relevant authorities: The transformation must be notified to the authorities with whom the company is registered.

Strategic Benefits of Transformation

Beyond legal compliance, corporate transformation optimizes operational management and business development. This process allows the internal structure to be aligned with the current needs of the company, streamlining strategic decision-making and strengthening governance.

Among its benefits are:

  • Flexibility to adapt to new corporate needs without losing operational continuity.
  • Protection of the rights of partners and shareholders, as the company retains its contracts, assets, and legal obligations.
  • Optimization of the administrative structure, enabling more efficient management based on the chosen company type.

To fully realize these benefits, it is essential to carefully review the Articles of Incorporation and any private agreements between partners/shareholders that are in force, assess possible fiscal or regulatory impacts, and ensure that all corporate records and documents are properly updated to prevent future contingencies.

With proper legal advice, the transformation process can be carried out efficiently and securely, allowing the company to continue operating without interruptions and adapt to market changes.

Before initiating any transformation, consult with our corporate law experts to assess risks, legal requirements, and benefits according to the type of company and business objectives.



The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.