PANAMANIAN FOUNDATION
In 1995 laws were passed in Panama that allowed residents and non-residents to create Panamanian foundations as a way to protect themselves against lawsuits or to protect their assets from taxation. Now, the idea of the foundation is not new to Panama; it was a financial entity that was first put into practice in Liechtenstein in 1926. In fact, the model for the structure of Panamanian foundations is based on a mix of laws from the countries of Liechtenstein, Luxembourg and Switzerland - the difference being that Panamanian Foundations are much less expensive than their European competitors. For example, in Liechtenstein, it normally cost $25,000 to open a foundation and $10,000 a year to maintain a foundation. In Panama, you pay just $250 a year to maintain your foundation
How A Panamanian Foundation Is Organized
Founder – Is the entity that creates the Foundation and is the person who gives the foundation its corpus or patrimony to the entity through charter documents and for the benefit of third-party beneficiaries to his or her advantage. For most investors it’s best if the Founder is a resident of Panama.
The Corpus – Are the assets the foundation manages, collects, and administers through the Foundation Council. Normally this is in cash, hard assets such as real estate and securities or any other item of value. These assets can be put into the foundation at its inception or at a date after the foundation is created.
The Beneficiary – The Beneficiary does not need to be identified when the foundation is created, but at some point the Beneficiary will need to be identified. The Beneficiary will hold title to all assets in the Foundation; he or she will manage assets as well as conserve and enjoy the assets within the Foundation. The Foundation should not be used by the Beneficiary as a means for transferring or conveying property.
Articles of Incorporation
The Articles set out the clauses and articles propounded for the existence of the Foundation. The Articles of the Foundation must be registered in the Panamanian Public Notary or at a Panamanian Counsel abroad. The Articles must contain at least three members of the Foundation Council; establishment of corpus or patrimony; where the Foundation is domiciled; name of resident agent who countersigns all acts; the Foundations purposes; listing of beneficiaries; right to modify the Articles of Incorporation; duration of Foundation and causes for the Foundation’s termination; rules of the return of assets.
The Bylaws
The bylaws outline what the Founder intends to do with the Foundation: this will include enumerating the objectives of the Foundation. The Bylaws are not a public document like the Articles but rather act as a general outline as to what the Foundation Council will do; the Council must follow it. The document also explains the relationship between the Council and the Beneficiaries as well as listing and describing the ways in which assets will be transferred, and list investment and management policies in regard to assets held by the Foundation. Remember, this is not a public document so it is kept secret and confidential.
The Foundation Council
This is the main body of the Foundation and is responsible for acting in accordance to the Articles of Incorporation as well as the Bylaws. The responsibility of the Council is to is manage and administrate the assets of the Foundation, such as preparing annual accounting reports for the Beneficiaries, and to defend and represent the interests of the Foundation against any outside parties. The Council is made up of three members that can be either persons or entities and operate in a trustee capacity to the Founder and are responsible for the care of the Foundations assets.
Supervisory Committee
Gives the Beneficiaries control over what the Council is doing with the assets inside the Foundation. In essence the Committee is a “night watchman” that oversees the activities of the Council, such as to how the Council is managing the assets of the Foundation; it can also act as a kind of “mediator” in conflicts between the Council and the Beneficiaries. It is up to the Committee, which consists of a “protector” to remove members of the Council; also, the Committee is not answerable to the Council on the day-to-day activities of the Foundation, giving it the ability to change policies within the Foundation unilaterally. In short, the role of the Committee is to insure that the Founder’s wishes are being carried out within the Foundation. PPanama Foundations, Moving to Panama, Panama IBC's, Incorporation Services, Panama Legal Services, Panama Immigration, Foundations, private interest foundation, Embassies and Consulates of Panama, Panama Corporations