BENEFITS AND THEIR DISTINCTION WITH CORPORATIONS AND TRUSTS

Through Law 25 of June 12th, 1995 the socalled "Private Interest Foundations" in Panama are regulated.

A Private Interest Foundation is a legal entity whose purpose is the acquisition of assets to be managed and preserved according to the will of the Founder. This legal instrument is born through a unilateral act of free disposition that takes the legal shape of a donation and operates as a trust, with the Founder designating the beneficiaries, the Founder himself being able to be one of them.

The Foundation is then, a legal entity that is born with the incorporation of a heritage attributed to it that originates the legal existence of a legal person whose function is limited to acts of mere conservation in favor of the beneficiaries designated in the foundation, or, the Foundation may exist with the variant that it is a legal instrument endowed with a heritage product of the mere liberality whose purpose is the guarantee and conservation of the assets consigned in said instrument.

I. BENEFITS OF A PANAMANIAN PRIVATE INTEREST FOUNDATION

  • It is possible to open bank accounts in the name of the foundation, anywhere in the world.
  • The foundation may own movable or immovable property of any kind.
  • A foundation is a mechanism for the distribution of wealth in favor of the beneficiaries established under the guidelines of the Foundation Charter and Regulations, as well as asset protection.
  • It facilitates the transfer of family assets between family members, without having to go to a succession trial.
  • Allows the nominal founders and the nominal foundation council to remain anonymous.
  • All information related to the foundation is confidential.
  • For all legal purposes, the assets of the foundation will constitute assets separate from the personal assets of the founder. Therefore, they cannot be kidnapped, seized or subject to action or precautionary measures, except for obligations incurred, or for damages caused by the execution of the purposes or objectives of the foundation, or by legitimate rights of its beneficiaries. In no case will they respond for the personal obligations of the founder or the beneficiaries.

II. DISTINCTION BETWEEN CORPORATION AND PRIVATE INTEREST FOUNDATION

  • The corporation is a contract that produces its effects against third parties at the time of its incorporation. The Foundation is an act of mere liberality, of unilateral nature and is not a contract.
  • The company issues shares to determine who has control or ownership rights over the legal entity. In the Foundation, there are no shares, and control is exercised through the Regulations and there are no owners (shareholders) but beneficiaries.

III. DISTINCTION BETWEEN TRUST AND PRIVATE INTEREST FOUNDATION

  • The Trust is a contract that arises from the will of the trustor and the property is transferred in favor of the Trustee so that it can be administered for the benefit of third parties called trustees and/or the trustee himself. The Foundation is a binomial based on an act of mere liberality and only the declaration is enough for its improvement.
  • The Trust is not a legal entity, but a simple contract. The Foundation constitutes a legal entity that has its own legal personality with the capacity to contract and be bound by third parties.