Panamanian Private Interest Foundations
Only US$995.00
The Legislative Assembly approved in June of 1995 Law NBA 25, whereby private interest OFFSHORE Foundations are regulated. Offshore Foundations under this law (a mix between Liechtenstein Anstalt Law and Panama Trust Law of 1984) are basically trusts that operate like companies (through a Board of Governors). Their purpose is mainly to channel funds or assets for charitable purposes, but they can be used for donations, and for transferring funds to beneficiaries just like a Trust would do. The important aspect of a Foundation is that it is a juridical person just like a corporation is. We will summarize in the following lines its relevant aspects:
1. CONSTITUTION: The Foundation may be constituted by one or more natural or juridical persons, either by themselves or through third parties. The endowment of a Foundation capital is required, exclusively destined to the purposes expressly provided in the Foundation instrument. The Foundation
capital may be increased by the founder or by the Board of Governors of the Foundation. Constitution may be obtained through the following methods;
a) a private instrument subscribed by the founder, whose signature must be authenticated by a Notary Public; and
b) before the Notary Public of the place of constitution. In case the foundation is to be formed to have effect after the founder's death, testamentary grant formalities are not required.
The Foundation instrument must contain:
a) Name of the Foundation, which must not be identical or similar to any other existing Foundation in Panama. The word "foundation" must be included in the name;
b) Foundation capital not less than US$10,000.00.
c) Names and addresses of the Foundation board members to which the founder may belong (they may be nominee board members);
d) Domicile of the Foundation;
e) Name and domicile of the Foundation's resident agent (lawyer or law firm) who must authorize the Foundation instrument before
its registration at the Public Registry Office;
f) Purposes of the Foundation (generally broad in scope);
g) Procedure to appoint the Foundation's beneficiaries, among which the founder may be included;
h) Reserve of the right to modify the foundation instrument when
deemed convenient;
i) Duration of the Foundation;
j) Destiny of the Foundation assets and liquidation procedure upon dissolution, and;
k) Any other lawful clause the founder deems convenient.
2. PURPOSE: Private interest foundations must seek non-profitable purposes.
Nevertheless, commercial activities may be carried out and capital stock rights may be enforced by the Foundation as long as the outcome of such activities is destined to the Foundation's purposes.
3. TAXATION: All foundations are subject to payment of registration fees and annual franchise tax equivalent to those charged to Panamanian corporations.
All acts of constitution, modification, extinction, transference or
encumbrance regarding the foundation assets and foundation assets related income, are exempt of any kind of taxes, duties, charges or fees, if such assets meet the following requirement:
a) assets located abroad;
b) money deposited by natural or juridical persons whose rent is not of Panamanian source or not taxable in Panama;
c) stocks or any kind of securities, issued by corporations whose rent is not of Panamanian source or not taxable by any cause, even though those stocks or securities are deposited in Panama.
4. REGISTRATION: Registration of the Foundation instrument before the Public Registry Office shall invest legal capacity to the Foundation, regardless of any other legal or administrative authorization. Said registration will also be of public record against third parties.
5. FOUNDATION CAPITAL: Once the Foundation is registered, the founder or third parties that are obliged to the endowment of assets (either current or future), must formalize its transfer. An important characteristic of the Foundation capital is that it constitutes an independent property from the founder's personal property. Therefore, foundation capital may not be attached or garnished, except for damages or obligations incurred as result
of the foundation purposes. In any case, Foundation capital will compensate personal obligations of the founder or the beneficiaries.
6. IRREVOCABILITY: Private interest foundations and transfers to the Foundation are irrevocable.
7. FOUNDATION BOARD: This board must have a minimum of three (3) members, in the case of natural persons. Its main function is to fulfill the Foundation purposes.
8. SUPERVISORY ORGANS: Besides the Foundation board, the Foundation instrument may provide for the appointment of supervisory organs (custodians, auditors or any other similar) appointed by the founder or majority of founders.
9. DISSOLUTION: Specific causes are established in the Law, but in general they may be perpetual.
10. FOREIGN FOUNDATIONS: These may be registered in Panama and continue its legal existence as a private interest Foundation in the Republic of Panama.
Likewise, private interest foundations constituted according to Panamanian Law and its assets, are entitled to transfer to another foreign jurisdiction.
11. BANKING SECRECY: All members of the Foundation Board and Supervisory Organs as well as private or public functionaries that are aware of the Foundation's activities or operations must provide reserve and confidentiality at all times, and are subject to civil and criminal responsibility.
12. CONTROVERSIES: The foundation instrument may express that all controversies will be settled by arbitration. In lack of this provision, general Procedural Law would be applicable.
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