Panama Private Foundation
One or more natural or juridical persons by themselves or through third parties, may create a private foundation in accordance with the provisions set forth in Panama Foundation Law. Private foundations shall be governed by the foundation charter and its regulations, as well as by the provisions of Panama Foundation Law and other legal or regulatory provisions that may be applicable.
Private foundations shall not be for profit. However, they may carry out mercantile activities in a non-habitual manner or exercise the rights deriving from titles representing the capital of mercantile corporations that make up the patrimony of the foundation, provided that the economic results or proceeds of such activities be dedicated exclusively for the purposes of the Foundation.
Private foundations may be constituted to become effective at the time of constitution or after the death of its founder, by anyone of the following methods:
Through a private document, executed by the founder, whose signature must be authenticated by a notary public at the place of constitution.
Directly before a notary public at the place of constitution. Whichever may be the method of constitution, it must comply with the formalities established in the present Law, for the creation of foundations.
In case of a foundation being created either by public or private document, to have effect after the death of the founder, the formalities stipulated for the execution of testaments shall not apply.
Every private foundation must pay a registration fee and an annual maintenance tax equivalent to those established for corporations.
The foundation may acquire and own assets of any kind, incur obligations and be a party to any type of administrative and judicial proceedings in accordance with applicable legal provisions.
For all legal purposes, the assets of the foundation shall constitute a separate patrimony from the personal assets of the founder. Therefore they cannot be sequestered, embargoed or subject to any precautionary action or measure, except for obligations incurred, or for damages caused by virtue of fulfilling the purposes and objectives of the foundation, on behalf of the legitimate rights of its beneficiaries. In no case shall the assets respond for personal obligations of the founder or of the beneficiaries.
The creditors of the founder or of a third party shall have the right to dispute the contributions or transfer of assets in favour of a foundation, when the transfer constitutes an act of fraud to the creditors. The rights and actions of such creditors shall prescribe three (3) years from the date of the contribution or transfer of the assets to the foundation.
The foundation should have a Foundation Council, whose duties or responsibilities shall be established in the foundation charter or in its regulations. Unless it be a juridical person, the number of members of the Foundation Council hall not be less than three (3).
