With respect to the issue of the separation between the assets of the legal representative and the assets of the legal entity represented, Panamanian law does not contain a general, express, and uniform provision categorically establishing that legal representatives do not incur personal liability for the obligations of the represented entity.
Although the Panamanian corporate system recognizes the separate legal personality of corporations with respect to their legal representatives, the Civil Code, the Panamanian Commercial Code, Law 32 of 1927 (“Corporations Law”), and Law 4 of January 9, 2009 (“Limited Liability Companies Law”) do not contain a general and express clause providing that legal representatives shall not be personally liable for the ordinary obligations of the legal entity.
This gray area in national legislation has allowed judicial and administrative authorities, in certain cases, have ordered precautionary measures against assets or funds belonging to legal representatives as a consequence of obligations attributed to the companies they represent.
In response to this situation, the case law of the Supreme Court of Justice has, on several occasions, recognized the separation of assets between the legal entity and its representatives, ordering in certain cases the lifting of precautionary measures imposed against legal representatives. In doing so, the Court has relied on the principles of separate legal personality and on the analogous application of Article 444 of the Commercial Code, a provision establishing that corporate directors do not incur personal liability for the obligations of the company.
Examples include the judgments rendered in the cases of Auto Centro, S.A. v. Municipality of Panama (Judgment of July 10, 1997), Williams Arosemena v. Municipality of La Chorrera (Judgment of April 8, 2025), and Alexis Aizprúa v. IPAT (1997).
Therefore, although Panamanian law does not contain a general and unequivocal provision expressly defining the separation between the assets of the legal representative and the obligations undertaken by the legal entity represented, such separation has been recognized and developed through decisions rendered by various judicial courts.
There are also other legal entities, such as Private Interest Foundations, whose governing legislation (Law 25 of 1995) recognizes limitations on the personal liability of members of the Foundation Council when acting within the scope of their legal and foundational powers.
Likewise, Law 284 of February 14, 2022, regulating the Condominium Property Regime (Propiedad Horizontal), develops with greater precision the distinction between the obligations of the legal entity and the personal liability of those exercising representative or administrative functions, particularly in Articles 59 and 96.
In conclusion, in corporate matters there is no uniform and express provision protecting the assets of corporate legal representatives from the consequences arising from the commercial activities carried out by the entity. This has allowed, in certain cases, administrative and judicial authorities to impose precautionary measures or assert personal liability against legal representatives for obligations exclusively attributable to the represented entity.