Two main documents constitute a Panama Private Interest Foundation: the Foundation Charter and its Regulations or by-laws.
The Foundation Charter.
Panamanian Law requires that a Foundation Charter be registered at the Public Registry in order for the Foundation to acquire juridical personality. Like any other juridical person who will have rights and obligations and who will acquire and own assets of all kinds, the Law requires that certain basic information be provided in the Charter in order to validly constitute a Foundation.
The fact that the foundation charter needs to be registered offers the Panamanian vehicle more judicial safeguards: it grants the Public Registry the elements to issue a “Certificate of Public Registry” thus ensuring the real existence of the foundation. This document may be legalized by Apostille, and it will prove to be a great tool for the prompt opening of bank accounts in the name of the foundation.
The Foundation Charter must include the following information:
- The Foundation name.
- The Founder name.
- The initial capital of the Foundation (Usually US$10,000)
- Name and address of the 3 member or members of the Foundation Council.
- The domicile of the foundation.
- The name and domicile of the Resident Agent of the foundation in Panama.
- The purposes or objects of the foundation.
- The manner of appointing the beneficiaries of the foundation.
- The reservation of how to modify the Foundation Charter when deemed convenient.
- The duration of the foundation.
- Any other lawful clauses which the founder may consider convenient.
Regulations (Also known as By-Laws)
Any information not required by Law to be included in the Foundation Charter and which the founder would rather keep confidential can always be written into the “Regulations”.
The Regulations is a private document and, as such, does not need to be registered at the Public Registry or anywhere else. Traditionally, then, any information containing the names of the beneficiaries and their rights over the foundation property are written into the “Regulations”.
Consequently, the beneficiaries’ identities and all successory dispositions need not be revealed to any governmental agency, not even to the attorneys organizing the foundation.
The Law places practically no limits upon the structuring of the beneficial interests of a foundation. One of the more common scenarios is for the founder to designate himself/herself as beneficiary for life and provide successive beneficiaries upon his or her death.
The Law further enhances the confidentiality of this instrument by creating in article 35 severe sanctions (fines of up to US$50,000 and imprisonment of up to six months) for breach of the duty to maintain the information confidential. This obligation applies to members of the Foundation Council and of the supervisory bodies, if any, as well as to public or private employees having any knowledge of the activities, transactions or operations of the foundation.
Furthermore, the Regulations may be kept outside the country, in the hands of the founder, his fiduciary agent, the protector or any other person or institution vested with the confidence of the founder. For all of the above-mentioned reasons, the Panama Private Interest Foundation has been called “the perfect living will”. There is no need to open public proceedings if the founder dies, and his wishes regarding the use, transference, and final destination of his assets can be carried out privately by the Foundation Council.
