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In 1995, the Republic of Panama adopted Law No. 25 of 12.06.1995 on Private Foundations, which afforded entrepreneurs the opportunity of registering private foundations in Panama.
This Panamian law was based on Liechtenstein legislation - in particular, on the Liechtenstein Family Foundation Law of 1926.
The private foundation (hereafter, PF) in Panama is founded with the aim, similar to that of a trust, of preserving the property of the founder, to increase that property, and, in the event that the founder becomes incapable or dies, to distribute the property according to his or her given instructions.
The PF functions like a trust, i.e. it separates the owner from his property, thereby protecting that property from potential claimants (creditors, plaintiffs etc). At the same time, a PF fulfils the function of a will - its founding documents can contain precise instructions on the disposition of the property placed in the PF in the event of the death or incapacity of its founder. In that case, the manner in which the property of the PF is to be distributed is subject to the conditions prescribed in the founding documents, and not to the provisions of the law of the founder's country of residence.
For all its similarities to the trust, the PF has some significant advantages over the former, namely: |
| 1) | the PF is a separate legal entity, and it can therefore carry out the commercial operations necessary for servicing the property transferred to it - open bank accounts, enter into business transactions etc. |
| 2) | in the event that the owner of property transfers it to a PF, he or she in fact retains full and unrestricted control over that property, in that he or she can be named as the administrator of the PF, and in that way avoid the need actually to transfer his or her property into trust to be administered by third-party trustees. |
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| The legislation relating to PFs contains all the elements of trust legislation, namely: |
| – | the founder: the person who establishes the foundation and transfers his or her property to it for administration. |
| – | the foundation council: the persons who carry out the day-to-day administration of the PF. The founder himself or herself can serve in that capacity, as can other specially named persons. |
| – | the beneficiaries: the persons to whom, according to the founder's instructions, the property of the foundation will be transferred on the occurrence of specific stipulated events. |
| – | the protector: a supervisor appointed by the founder. It is his responsibility to ensure that the council strictly carries out the founder's instructions. |
| GENERAL INFORMATION | Total area - 78,515 sq km
Population - 2,500,000
Location - click here to see the map of offshore jurisdictions
Political status - Republic
Capital - Panama City
Official language - Spanish, English in general use
Official currency - USA Dollar (USD); Bilboa (PAB)
Time zone - GMT - 5 |
| Company type | Private Foundation |
| Directors/Officers | Management and ownership of Panama PF companies is vested in the Foundation Council.
Panama PF companies require a minimum of 3 natural persons from any legal jurisdiction, or a minimum of 1 corporate body from any legal jurisdiction to be appointed as the Foundation Council.
Each Panama PF company must file an information on its Foundation Council with the Register of Enterprises of the Panama. |
| Shareholders | The legislation on Panama PF companies do not consider a status of shareholders. |
| Authorised share capital | Minimal authorised capital = USD 10,000.
Authorised share capital in the case of Private Foundation is similar to amount of facilities contributed by its founder for activities of the company. |
| Company Names | The name of a Panama PF company must include the word "Foundation".
Company names containing restricted words such as "Bank", "Insurance", "Trust" etc. will not be permitted unless an appropriate national operating licence has been obtained by the company. |
| Beneficial Ownership information | There is no requirement to disclose an information about beneficial ownership of a Private Foundation to local authorities. |
| Filing of Annual Return | There is no requirement to file an Annual Return in Panama for Private Foundations. |
| Filing of Financial Statement | There is no requirement to file Financial Statements in Panama for Private Foundations. |
| Corporate Taxation | Panama PF companies are not subject to corporation tax in Panama. |
| Tax Treaties | Panama does not have treaties with any other jurisdictions dealing with the avoidance of double taxation. |
| Timeframe for incorporation | 6/7 working days. A complete set of company documents can be delivered in 4/5 weeks. |
| Takeover of management & secretarial services for an existing Panama PF company | Possible, following verification of Beneficial Ownership and agreement with and discharge of liabilities to previous corporate service provider in Panama. |
| "Ready-made"("Shelf") companies | We are happy to register new company in this jurisdiction in accordance with client instructions. |
| Price of Panama PF company | Each Panama Private Foundation is individually tailored in accordance with requirements of the each client, and therefore, the price of a Panama Private Foundation depends on complicity of its foundation documents, structure of foundation council and other details. Minimum price of Panama PF is USD 1,920, including incorporation costs, full domiciliary (Registered Agent/Office) costs, Nominee services and legal support services for one year. |
| Cost of annual support services | Not less than USD 990 per year, including full domiciliary (Registered Agent/Office) costs, annual Government Duty, Nominee services and legal support services for each year. |
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INTERNATIONAL OVERSEAS SERVICES has the following comments: -
A Panamian private foundation is a specific vehicle, basically intended for preserving the material wealth of the founder, with a view to passing it down to the second and third generation, rather than for carrying out day-to-day commercial transactions.
The legal separation of property from its owner can prove to be useful in the most unexpected situations, since a person's life is full of various risks, including financial risks. Ignoring such risks does not mean that they disappear. For this reason, it is likely that Panamian private foundations will in time become extremely popular, providing worthy competition for the trust and fiduciary structures currently popular in the West.
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