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Panama Foundation Important Note

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ESTABLISH A PRIVATE FOUNDATION IN PANAMA. PANAMANIAN PRIVATE FOUNDATION CREATION, Many clients are interested in setting up a type of entity that offers true asset protection and are not necessarily interested in operating a formal business entity with that structure. To state this another way, some clients may be investigating the idea of an Offshore Corporation or Trust structure, but in reality there may be a better vehicle to choose if asset protection and tax savings are the two primary goals. One such vehicle is the Panamanian Foundation. The Panamanian Foundation structure was codified into law in 1995. While this structure is a fairly new entity for Panama, the Foundation structure itself has existed in Liechtenstein for quite some time and the Panamanian structure was in fact modelled after the Liechtenstein legislation. Some advantages a Panamanian foundation has over a Liechtenstein foundation include; it is far less expensive to create and maintain, and it offers more flexibility.

The Panamanian Foundation can be created by one or more natural persons or by a juridical entity, such as a corporation. A foundation charter is created, which is essence, is similar to the incorporation documents created for a Panamanian company. Like the incorporation documents, the foundation charter document is public record. The foundation structure is directed by a “Council” of three or more members. This is similar to a corporation, which is directed by three directors or board members. These directors of the foundation are called Council Members. In addition, like a trust, a private protector may be named to have special oversight authority. The position of a protector is not required, but it is advisable. While the position of protector can be a private agreement between the foundation and the person acting as protector, extra protection is given to the client when this position is spelled out in the foundation charter. If you want to become familiar with the description and the contents of Panamanian Foundation registration packages, offered by Coddan and to find above, what kind of service is included in this or that Panama Foundation creation package, to get an idea about the price of annual renewal of the service, and about the general legal requirements to the Panamanian Private Foundations registration, please, select the package you need from the list, situated below the banner. The information in the banner will be renewed according to the package you've chosen.

Private Foundation. Free name check and advice on your chosen name. Advice on forming your private foundation, what constitution and objects, Founding Charter in original Spanish language and its English translation. Agent and registered office first year. Certificate of Incorporation in original Spanish and in certified English translation document. 3-5 days private foundation incorporation service which enables you to appoint protector & council details straight away. This procedure applies to all or packs with the payment of all government fees. This pack is sent directly to you via DHL. THE FOLLOWING UPGRADES CAN BE ADDED TO THE ABOVE PACKAGE: 1. Foundation Pliers Seals - £20.00. 2. Apostilled Certificate of Incorporation - £110.00. 3. Nominee Foundation Council for 12 months - £115.00. 4. Nominee Protector service for 12 months - £253.00. 5. Apostilled Certificate of Good Standing £140.00. +44 (0) 207.637.3802 +44 (0) 289.099.8744 +44 (0) 800.081.1510 info@ukincorp.co.uk

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Please note » The prices payable for the items that you order are clearly set out in the web site. There will be no contract of any kind between you and us unless and until we receive payment from you. We act as your agent in the incorporation of offshore companies. We are not able to guarantee that any such filing will be acceptable to Companies Registrar , nor are there any contractual obligation upon us to do so. If Companies Registrar rejects incorporation or other filing, we will credit your account with a full refund and the contract between us will be made void. Companies Registrar does not offer a cancellation facility for the incorporation of companies or the filing of documents. We will be unable to cancel any such submission on your behalf and will not refund any payment you have made. All prices shown at Coddan Web Site are in Great British pounds. Credit cards are the preferred method of payment; we accept VISA, MasterCard and Delta. We can accept payment in UK Pounds Sterling, US Dollars, Euros, Australian Dollars and Canadian Dollars.

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The Panama Private Interest Foundation is a type of entity that is a cross-breed between a trust and a corporation, however, it is neither. A Foundation is an entity that is different from any other legal entity known in Anglo-saxon law because it is not the legal personification of a person or group of persons (as with a corporation), rather it is a legal entity that does not have owners (share-holders, participants, or partners), and it traditionally has a specific purpose for the benefit of a general group of individuals.

The concept of a "Foundation" began during the Roman Empire, under the influence of Christianity. As an example, the Catholic Church was considered a divine foundation, and the various sub-organizations within the church had the legal control for administrating its' patrimony. The original foundations were not created for serving a private need for a specific individual or family, rather they were formed for serving the needs of a community. Several centuries later, the legal entity denominated as a "Foundation" continues to exist and is widely used and accepted around the globe for personal and private needs.

The concept of a "Private Interest Foundation" began when the Principality of Liechtenstein created the "Law of Persons & Companies", the 20th of January, 1926 (Personen und Gesellschaft Recht - P.G.R.), which created the "Family Foundation", (for the private benefit of the members of one or more families) and the "Mixed Foundation" (for the private benefit of not only families, but also for other persons or institutions).

Historically, wealthy families in Europe have established Family Foundations incorporated in the Principality of Liechtenstein (a Neutral jurisdiction for purposes of wars, etc.) for the purpose of estate-planning necessities, to ensure the safe transition of assets to the family's beneficiaries.

The Panama Private Interest Foundation is a legal entity that was developed based on the Private Interest Foundation models from three different jurisdictions including the Principality of Liechtenstein, Switzerland, and Luxembourg. The Panamanian Government carefully designed the Panama Private Interest Foundation with the intentions of creating a more modern, more flexible, and more affordable estate planning vehicle for people from around the globe. The assets of the Panama Private Interest Foundation take on a separate legal identity from the personal assets of the Founder, Protector, Council, or Beneficiaries.

The Panama Private Interest Foundation offers clear advantages for international estate planning, providing the ultimate in privacy, anonymity, and protection to the Protectors, Founders, and Beneficiaries of the Foundation. The Panama Foundation is a solution to a global need for an affordable, anonymous, flexible, private, estate planning vehicle that can be used to hold assets such as corporations, trusts, bank accounts, investment accounts, real estate, or any other type of asset.

A Panama Private Interest Foundation comes into existence upon its registration in the Public Registry. No approval from any public authority is required. Law No. 25 of June 12, 1995 regulates Panama Private Interest Foundations.

Coddan offers offshore company formations, private interest foundations and registration of vessels and mortgages. As your company formation agents, we can only act on information and instructions given to us. You should not assume that we have knowledge of any factual matters. All of the information contained on this web site is not meant to be advice, nor should it be followed. The information on this site pertains to U.K. law only and is offered as a public service. It is not intended to give legal advice about a specific legal problem, nor does it create an attorney-client relationship. We do not hold ourselves out as offering tax advice, although we do not hold ourselves out as experts in the laws of any foreign country.

If you order an offshore company we usually require to send us by fax, email (as attachments in PDF, GIF or JPEG format) or mail: copy of the passport (with photo, signature and personal data pages) of the beneficial owner of the company; copy of the passport (with photo, signature and personal data pages) of the individual who contacts us and places order with us if he is not the beneficial owner. Beneficial owner is the individual who benefits from ownership of a company regardless of who holds title.

PANAMA - SECOND MOST POPULAR JURISDICTION IN THE WORLD.

Panama is the registered domicile for over 400,000 corporations & foundations, making it the second most popular jurisdiction to incorporate in the world, next to Hong Kong.

NO REPORTING REQUIREMENTS OR TAXES.

Panama does not impose any reporting requirements or taxes for Panamanian Foundations.

NO PIERCING THE CORPORATE VEIL.

Panama does not allow "piercing the corporate veil", so your Foundations books are maintained 100% private and confidential by law.

REQUIREMENTS FOR THE FORMATION OF A PRIVATE INTEREST FOUNDATION IN PANAMA.

The Foundation Charter shall be executed by the Founder by means of a private document, in which case it should be authenticated by a Notary Public, or by means of a public document directly before a Notary Public.

The requirements that must be contained in the Foundation Charter as follows: name desired for the Foundation expressed in any language with characters of the latin alphabet. The name shall include the word "Foundation" to distinguish it from natural persons or from juridical persons of another nature. Initial patrimony of the Foundation, expressed in any currency of legal tender, and which shall in no case be less than an amount equivalent to ten thousand U.S. dollars (US$10,000.00). A complete and clear designation of the member or members of the Foundation Council, to which the Founder may belong, including their address. Domicile of the Foundation. The name and domicile of the resident agent of the Foundation in the Republic of Panama, who shall be a lawyer or law firm. The resident agent must countersign the Foundation Charter prior to its registration at the Public Registry. Purposes or objects of the Foundation. The manner of appointing the beneficiaries of the Foundation, which may include the Founder. The reservation of the right to modify the Foundation charter when deemed convenient. Duration of the Foundation. The destination to be given to the estate of the Foundation and the manner in which such estate shall be liquidated in the event of dissolution. Any other lawful clauses which the founder may deem convenient.

In order for a law firm to provide full services in the constitution and management of Private Interest Foundations, the following information will be necessary:

Name desired for the Foundation to check on its availability. Initial patrimony if other than the standard of $10,000.00. Names and addresses of the members of the Foundation Council, which will be no less than three (3) members (natural persons), unless a juridical person is appointed, in which case a minimum of one member is required. The law firm may provide nominees for these positions. Domicile of the Foundation, if other than Panama. Purposes. Duration, if other than limited. Name of the protector if required. Registration of a Private Interest Foundation takes approximately 3 to 5 working days. No other legal or administrative authorization is necessary after the registration of the Foundation Charter in order to constitute the Foundation as a legal entity.

AMENDMENTS TO THE FOUNDATION CHARTER.

Amendments to the Foundation Charter shall be executed in accordance with the provisions of the Foundation Charter and must contain the date and name of the person(s) subscribing the same. The signature of the persons duly authorized to carry out such amendment must be authenticated by a Notary Public of the place of execution of the document.

MANAGEMENT STRUCTURE.

The Council of the Foundation shall be the governing body, entitled to exercise all the powers of the Foundation and subject to the powers reserved by Law, the Foundation Charter and the regulations which may be adopted from time to time. The Foundation Council shall be composed of no less than three (3) members (natural persons), unless a juridical person is appointed, in which case a minimum of one member is required. The Foundation Council shall render accounts annually to the beneficiaries of the Foundation, unless otherwise specified in the Foundation Charter. The Foundation's Regulations are for internal purposes of the Foundation and are not a matter of public records. Information regarding names of beneficiaries and of the protector and method for distribution of assets can be contained within the Regulations; thus, will not be publicly disclosed.

ANONYMOUS OWNERSHIP AND CONTROL.

The Protector and Beneficiaries need not be publicly registered. Panama Foundations Protectors can be appointed through a Private Protectorate Document, and the Beneficiaries can be appointed through a Private Letter of Wishes, written and signed by the Private Protector.

NO CAPITAL REQUIREMENTS.

Panama Foundations do not require Paid-In Capital.

ELEMENTS OF A PANAMA PRIVATE INTEREST FOUNDATION.

Founder: The Founder is the person or entity that establishes the Foundation in the Public Registry of Panama. Our law firm is generally the Founder of each Foundation that we establish, since it is our law firm that goes to the public registry to incorporate the Foundation. The Founder has no influence over the control of the Foundation, and is only recognized as the individual who presented the Foundation articles in the public registry when the entity was originally registered.

Council: The Foundation's Council serves the same purpose as the board of directors on a corporation. The council members are each registered in the public registry with their names, addresses, and identifications as council members to the Foundation. Our firm generally appoints a "Nominee Foundation Council" to fill the council positions, so to provide additional privacy and confidentiality for our clients. When we appoint a nominee council, we provide our client with pre-signed, undated letters of resignation from each nominee council member so that our client can replace the council at any time. The nominee council has no control over the Foundation or any of its' assets, they are only there to fill in the blanks in the public registry.

Protector: The Protector is the person or entity who ultimately Controls the Foundation and all assets held within it. The Protector is appointed by the Foundation Council when the Foundation is created, however, once the Protector is empowered, the Protector can then remove the council members at any time without consent of any one else. The Protector can be appointed privately, through a Private Protectorate Document, signed by the Foundation Council. Hence, the Protector can maintain this position free of public knowledge.

We generally appoint our client as Protector of the Foundation, through a notarized Private Protectorate Document so that our client maintains complete control over the Foundation, in a private and anonymous manner. Once the Protector is appointed, it can always be changed per the Protectors wishes. However, a Protector is not required and if you prefer, you can choose to not use a Protector, or to use a nominee Protector.

Beneficiaries: Unlike a corporation that issues share certificates to certify who the owners are, the Panama Private Interest Foundation does not have owners, rather it has Beneficiaries. The Foundations Beneficiaries are appointed by the Protector through either a simple, privately written Letter of Wishes, or through a more formal set of Foundation By-Laws (Foundation By-Laws should be written with the assistance of a Panamanian Attorney). Either way, the privacy and confidentiality of beneficiaries can be protected through their appointment in the Letter of Wishes, or By-Laws of the Foundation, since the contents of the Letter of Wishes or By-Laws may remain private and need only be known to interested parties. Also, a Panama Foundation may be set up so that the Protector is the sole beneficiary until his or her death, at which time the foundation continues for the benefit of other beneficiaries.

Letter of Wishes: The Letter of Wishes is a simple letter, written by the Protector, which specifies exactly how the Foundations assets should be handled or distributed upon a triggering event such as the death or incapacity of the Protector. The Letter of Wishes should also state whether the Foundation should continue existing, and have a new Protector appointed, or if the Foundation should be dissolved upon the death of the Protector. There is no specific format that the Letter of Wishes must be written, and it can be written or changed at any time after the Foundation is incorporated, per the Protectors wishes. The Letter of Wishes can be held privately, or can be registered publicly. Generally, most people prefer to maintain the Letter of Wishes privately, so that the Beneficiaries and Protector remain anonymous and private.

Foundation By-Laws: The Foundation does not need to have By-Laws, since a Letter of Wishes is legally sufficient for expressing the Protectors' requested testamentary instructions. However, if one wishes to have a more formal Foundation testamentary document, written and signed by a Panamanian Attorney, and notarized by a Panamanian notary, then one can request the assistance of a Panamanian attorney to draft the Foundations By-Laws. The Foundations By-Laws essentially handle the same function as a Letter of Wishes since the By-Laws should specify exactly how the Foundations assets should be handled or distributed upon a triggering event such as the death or incapacity of the Protector. The By-Laws should also state whether the Foundation should continue existing, and have a new Protector appointed, or if the Foundation should be dissolved upon the specified triggering event(s). There is a specific format that the By-Laws must be written, yet the contents of the By-Laws can be changed at any time after the Foundation is incorporated, per the Protectors wishes. The By-Laws can be held privately, or can be registered publicly. Generally, most people prefer to maintain the By-Laws privately, so that the Beneficiaries and Protector remain anonymous and private.

DIRECTORS OR BENEFICIARIES MEETINGS.

Annual general meetings of council members of the Foundation are not mandated or required. However, if meetings are held, they can take place anywhere in the world by proxy - via telephone, email or other electronic means. Any resolutions passed are valid regardless of whether they are signed on different dates or in different jurisdictions.

BENEFICIARIES.

The Beneficiaries of the Foundation need not to be known by us when registering the Foundation. When you receive the Foundation documents, you will appoint the Protector, by signing the Private Protectorate Document. The Protector will need to write a Letter of Wishes, indicating who the beneficiaries of the Foundation are.

CORPORATE BOOKS.

The Registered Agent is not required to keep any records for the Foundation, however, it is recommended that every Foundation should maintain a minute (council meeting) record book, which can be held anywhere in the world.

CONVENIENCE.

It is not necessary for the interested parties to be present in Panama for the purpose of establishing a Foundation. We can handle everything for you without you having to come to Panama.

NO BUSINESS LICENSE REQUIREMENT.

Panama Foundations DO NOT require a commercial business license to operate internationally.

RE-DOMICILIATION.

Foundations from other jurisdictions may be "re-domiciled" to Panama, and vice-versa. Many people who have corporations in jurisdictions such as Liechtenstein, Switzerland, and other jurisdictions are currently re-domiciling their Foundations to more affordable, private and secure jurisdictions such as Panama.

LEGAL ADDRESS.

When registering a new Panama Foundation, it must have a legal physical address that is included in the articles of incorporation. Our law firm provides a legal physical address as Resident Agent and Registered Office.

PRACTICAL USES OF PRIVATE INTEREST FOUNDATIONS.

Panama Private Interest Foundations may be established for the benefit of a person or persons, a family, or a specific social purpose.

In general, Panama Private Interest Foundations are used by people who wish to control and maintain ownership of foreign corporations, however, they do not wish to own their corporations themselves directly, due to the Controlled Foreign Corporation (CFC) rules in their home countries. Several highly taxed countries such as the UK, Canada, USA, Australia, New Zealand, France, Italy, Spain, etc. have CFC rules which require that their citizens submit declarations (reports) to the appropriate tax authorities, in which they declare that they are the shareholders of such foreign corporations.

Instead of holding the corporations' shares in their personal name or in bearer form, they establish a Private Interest Foundation in Panama that holds or owns the shares of their foreign corporation(s), thus avoiding the CFC reporting rules. Hence, the advantage of using the Foundation as a shareholder for their corporation is to remove ownership from one's personal name (or through a Bearer Share arrangement), and transfer ownership to the name of a foreign entity which does not have owners, rather has privately appointed beneficiaries, which are anonymous. In this way, there is no question as to who owns the company, since the company's shares are issued to the Foundations' name.

Another advantage of utilizing the Foundation as a shareholder applies in the following scenario: In many cases, when opening corporate bank accounts or investment accounts, the financial institutions require that you reveal the beneficial owners of the corporation. Through the Foundation ownership strategy, one can state that the Foundation is the owner of the corporation. Again, the objective is to remove ownership from their personal name, to the name of a foreign entity whose ownership is anonymous.

The Panama Foundation provides additional advantages other than just ownership. For example, the Panama Foundation can be useful in transferring funds offshore or receiving funds from offshore. In some cases, people use Panama Foundations as vehicles for these purposes. Some people donate their funds to their Panama Foundations and later use the Foundation to give educational or special grants to their children, grandchildren, or any one else they choose. The advantage in this case, is to avoid fiscal regulations surrounding donations, where some governments impose "gift taxes" and exhaustive reporting requirements.

In general, Private Interest Foundations may not engage in habitual profit-making commercial activities as a corporation can. Nevertheless, they may carry out commercial activities from time to time, as long as the profits of those activities are used for the objectives of the foundation. For example, a Private Interest Foundation may engage in banking or investment activities, such as investing in bank time deposits (Certificates of Deposit - CD's), stocks, bonds, mutual funds, options, money markets, etc. so long as the proceeds from these investment activities are for the benefit of the beneficiaries of the Foundation.

Documents Download »
Decree Law No.9 of 1998 (Summary) (20Kb RTF file)
Panama Law No. 25 June 12, 1995 Whereby Private Foundations are regulated (34Kb RTF file)
Republic Of Panama Law 32 of February 26, 1927, General Corporation Law (70Kb RTF file)
LAW 24 (of February 1, 1966) Regulating Enterprises of Limited Liability (55Kb RTF file)
Executive Decree No. 417 (of August 8, 1995) (33Kb RTF file)
Law No. 1 Of January 5, 1984 (81Kb RTF file)