Foundation Council
A body known as the Foundation Council (equivalent to a Board of Directors in a corporation) shall be appointed in s Panama Private Interest Foundation.
The Foundation Council shall be appointed at the time of incorporation. It shall be formed by no less than three (3) members in case of natural persons or only one (1) in the case of juridical person. The Law does not require any of its members to be Panamanian.
The powers and responsibilities of the Foundation Council shall be established in the Foundation Charter or in the Regulations. As a general rule, the Foundation Council shall be responsible for carrying out the objectives of the foundation and to administer the assets of the foundation according to its Charter or its Regulations.
Please bear in mind that the Foundation Charter and/or the Regulations of a foundation may also limit or expand the powers of the Foundation Council to suit the wishes of the founder. Additionally, the founder might appoint himself as a member of the Foundation Council and require that certain decisions be taken by unanimity.
All such acts may need to be previously authorized by a protector or other supervisory body. Moreover, the founder may reserve for himself/herself or for any other person the right to remove the members of the Foundation Council. This disposition must also be expressly established in the Foundation Charter.
Registration Fees & Taxes
Private Interest Foundations shall only pay registration fees and annual taxes equivalent to those applicable to Panamanian corporations. The Panamanian Foundation is considerably less expensive to set-up, maintain and dissolve than its European counterparts.
As in the case of corporations, the amount of the registration fees will depend on the foundation’s original capital. The annual franchise tax is U.S.$300.
Arbitration
Article 36 of the Law makes it clear by statutory disposition that any controversy arising in connection with the foundation may be resolved by arbitration, thus avoiding the need to litigate through the Judicial System of Panama. The arbitration process may take place in any location and may be subject to any procedure established by the founder or any other authorized body of the foundation.
Protector – Supervisory Bodies
The founder may also establish other special arrangements in order to retain control or supervision over the foundation assets during his or her lifetime. The founder may appoint protectors, auditors or other supervisory entities to supervise the acts of the Foundation Council prior to or after his/her death, since article 25 of the Law expressly authorizes the creation of such additional entities or supervisory bodies.
The figure of the protector has been widely used in Common Law jurisdictions when settling a trust. This is yet another innovation of the Panamanian Law which further ensures the safety of the instrument and, thus, makes it even more attractive as an estate-planning instrument.
Forced Heir Ship Provisions
Following a recent trend adopted in the trust legislation of some Common Law jurisdictions like BVI, Belize, Grand Cayman, The Bahamas, as well as Jersey and Guernsey, Panama’s Private Foundation Law (Article 14) specifically provides that forced heir ship laws of another country shall not affect the foundation or its validity and shall not prevent the attainment of its purpose as provided in the Foundation Charter or its Regulations.
Moreover, the foundation assets will not be part of the founder’s testamentary estate -having become legally autonomous – the legal norms of his/her personal law cannot restrict or limit in any way the structuring of the rights of the beneficiaries of the foundation. Formalities required for the execution of wills shall not be applicable to Panamanian Private Foundations.
