Private Interest Foundation: Establishment Process in Panama

Corporate Law
Written By Ime Maldonado R

Establishing a Private Interest Foundation in Panama is a meticulous process governed by specific legal parameters. Here's an overview:

Legal Basis: The process is governed by Law 25 of 1995 and subsequent updates, along with Title II of Book I of Panama’s Civil Code. The Foundational Act and its Bylaws dictate the foundation's operation.

Purpose: The foundation aims to establish patrimony exclusively for the objectives outlined in its Foundational Act.

Limitations: The foundation cannot engage in profit-making activities but may undertake occasional commercial endeavors or exercise rights derived from its assets, provided the economic outcome solely serves the foundation's objectives.

Requirements for Foundational Act: Several key elements must be included in the Foundational Act, such as the foundation's name, initial assets, designation of council members, address, purpose, duration, asset destination upon dissolution, and other lawful clauses. The Act must be notarized and translated if not in Spanish.

Legal Status and Assets: Registration in the Public Registry grants legal status to the foundation. Its assets are distinct from the founder's personal assets and are shielded from seizure, except for certain circumstances outlined in the law.

Foundation Components: The foundation comprises the Founder, the Foundation Council, and optionally, a Protector. The Foundation Council manages assets, enters legal transactions, and is accountable to beneficiaries.

Dissolution: The foundation may dissolve under various circumstances, including fulfillment of objectives, insolvency, or revocation.

Fees and Charges: The foundation is exempt from taxes and fees, with specific exemptions outlined in the law. Registration and annual fees apply, as stipulated in relevant legislation.

Foundations under Foreign Law: Foreign foundations can continue their legal existence in Panama by adhering to specified procedures and submitting required documentation.

Why a Private Interest Foundation in Panama?

  • Asset Protection

  • Confidentiality

  • Flexible Governance

  • Tax Benefits

  • Estate Planning

  • Continuity

  • International Recognition

  • Versatility

Overall, establishing a Private Interest Foundation in Panama offers a robust legal framework, asset protection, and tax advantages, making it an attractive option for individuals and businesses seeking to safeguard and manage their assets effectively.

For further details or assistance with establishing a Private Interest Foundation, please contact us at info@pacifica.legal.

Ime Maldonado R
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