Panama Private Interest Foundations
What is a Panama Private Interest Foundation
We can start with its purpose.
It is important to clarify that a Panamanian Private Foundation cannot be simply profit oriented or be used to carry on a particular business.
Although the Private Foundations shall be used more as a holding company, it can sporadically perform certain acts of commerce when such acts are convenient or advantageous to the Foundation and only if the proceeds of such acts are dedicated exclusively to the non-commercial purpose or objectives of the Foundation.
Therefore, the purpose of a Private Foundation shall be along the following lines: “To contribute to the costs of upbringing, education, aid, as well as general maintenance or other similar aims of one or more members of one or several families as established in its Regulations.”
In addition to the members of one or several families, the foundation may benefit other persons or corporate entities, including institutions of any kind, and it may take the necessary provisions for the orderly disposition or succession of its patrimony.
To achieve its object, the foundation is authorized to preserve, administer, and invest in an appropriate manner the foundation’s assets, being these assets of any kind, particularly of real estate and participations in other entities, and to conclude all businesses and legal transactions serving the pursuit and the realization of such objects.
The first document: The Foundation Charter.
For those readers who are not familiar with the concept of a foundation, it consists in the endowment of a patrimony for a specific purpose determined in the document whereby the foundation is created and internally organized known as the Foundation Charter.
Once the Foundation Charter is registered in the Panama Public Registry, the property endowed or to be endowed becomes an estate separate and apart from that of its founders by acquiring a juridical autonomy of its own, thus becoming a Private Foundation.
The person who create the endowment is known as the “Founder” and the persons who benefit from the endowment (traditionally the founder and/or members of his family) are known as “Beneficiaries”. An appointed body known as “The Foundation Council” is entrusted to pursue the objects of the Foundation and its management. Additionally the client is usually appointed as “Protector” with full right to act and represent the Foundation during its lifetime.
The key document: The Regulations.
Contrary to a traditional corporation, a Private Foundation does not have shares, it does not recognize shareholders and the Founder does not acquire any such rights in relation to the foundation’s property. The Law does recognize, however, the Beneficiaries or the persons in whose benefit the foundation is created, which can include the Founder.
The information about names and rights of the beneficiaries of the foundation is usually provided to the Foundation Council by means of a private and confidential document (that is to say a document which does not need to be registered in the Public Registry) known as The Regulations.