The foundation of private interest in the Republic of Panama is based on a law that answers to the necessities of those who constitute it, because it is modern and flexible. It is based on the European foundational structure, predominantly on the familiar foundations of the principles of Liechtenstein.
It is the ideal means to plan heritage and/or assets protection because it is structured like a trust but it works similarly to an anonymous company. The foundation does not have share holders, but beneficiaries, meaning the people to whom the benefits are constituted for and to whom the purposes of the foundation are set up for. Likewise the foundation cannot be used for profitable purposes, however there is an exception, namely that the foundation can administrate assets of its own estate.
The Foundation Minute is the document of incorporation of the foundation in the registration rule; it makes the foundation an incorporated juridical entity, defining itself as asset/estate donations for some objectives to be determined.
It has two main elements: a public one which is the document of incorporation or «Foundation Minute» , and a private one denominated «Administrative Regulation» The Foundation Minute
The Foundation Minute
It is the document of incorporation of the foundation in the registration regimen; it makes the foundation an incorporated juridical entity, defining itself as patrimony donations for some targets that it determined.
Administrative Regulation:The rules that regulate the private foundation operating are not required to be registered within the foundation minute. This is what makes its structure private, within these rules can be found the confidential information relating to the benefits and the way its assets are distributed.
The Main Objective of a Private Intrest Foundation
By means of the «Foundation Minute» a founder and/or third party donates an asset to be used for a specific purpose , which can also be increased if he/she wishes so. This donated asset becomes autonomous and ceases to be part of the donator’s assets, acquiring its own juridical position. The body in charge of administrating this patrimony is a foundation board which represents in its essence the constitution of a board of directors. These people who form the foundation board should be mentioned in the «Foundation Minute». A «Protector» can also be named who would be responsible for observing that the «foundation board» exercises proper administration of the distribution of benefits.
The people or institutions that receive benefits from the patrimony administration are called «Beneficiaries». They are appointed by the «foundation board» in a private way through a document called the «Administrative Regulation». In this «Administrative Regulation» the distribution model is chosen to organise the relationship between the participating beneficiaries. At the very end of this document the will of the founder or the one who makes the donations is expressed.
What Makes a Private Intrest Foundation Convenient
The principal attractions which can be identified through the law of anonymous companies are:
- The registration of the «Administrative Regulation» of benefits distribution is not required;
- A sense of privacy is given as it is not subject to an income tax report and there is no need to present financial statements;
- There are no limits to donations or assets because it is not necessary to inform the increase in assets;
- It is subject to rights, namely that the one who founded does not necessarily need to be the one who donates but can he/she can still keep control of the foundation,becoming «The Protector»;
- Its domicile can be in the Republic of Panama or any other part of the world;
- The foundation estate assets cannot be seized or suffer embargos;
- The heritage rights rules are not applicable under any circumstances;
- It protects people who are under age or handicapped;
- It cannot administrate their assets nor are people exposed to lose their patrimony.
