Panama Private Interest Foundations
Foundation Charter & Regulations
Two main documents constitute a Panama Private Interest Foundation, The Foundation Charter and its Regulations (also called 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 corporate entity who will have rights and obligations and who will acquire and own assets of all kinds, the law requires for certain basic information to 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 (or also called Certificate of Good Standing) 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.
Any information not required by law to be included in the Foundation Charter and which the founder would rather keep private 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, 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 does not need to be revealed to any third parties.
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 as beneficiary for life and provide successive beneficiaries upon his death.
The law further enhances the confidentiality of this instrument by creating in the Foundations Law 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, 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.