A Private Foundation consists of one or more “founders” who undertake to contribute or donate an amount not less than US$10,000, managed by a “ Foundation Council” and a “Protector” if appointed, (known in law as “supervisory bodies”) and beneficiaries.

1. The Founder

One or more persons, whether natural persons or bodies corporate, may be the Founders. The Law prescribes that the assets may be donated by declaration so to keep the founders name confidential.

Founders have rights and obligations where the Foundation Charter grants the Founder full power, the Founder shall have the right and power to adopt the Foundation Regulations, amend them, freely appoint and remove the Foundation Council, the Protector and the Beneficiaries, act as adviser, protector or beneficiary, revoke the creation of the Foundation or any transfer made to it, receive and demand Statements of Account and redomicile the foundation and/or dissolve it.

After the registration of the Foundation, the Founder shall acquire the obligation of the contributions he has undertaken.

The Foundation’s assets constitute an estate separate from the Founder’s personal/corporate assets.

2. The Foundation Council

A Foundation is managed by a Foundation Council, which is charged with the popularity of maintaining the Foundation’s aims and objectives.

If the Foundation council should be a body corporate, the number of members comprising it shall not by less than three.

The Foundation Council has rights and obligations in respect of the Foundation. In general, the Foundation Council is granted full administrative powers (together with the required authorisation from the “Protector”, if appointed, and has the right and power to adopt the Foundation Regulations, to amend same, to appoint and remove its members, to freely appoint and remove the Beneficiaries, to contribute assets of any nature to the Foundation, to dispose of assets, to enter into any acts or contracts in the name and on behalf of the Foundation, to grant special or general powers of attorney, to redomicile the Foundation and to dissolve it.

The Foundation Council has the obligation to act with the diligence and to obtain authorisation from the Protector (if one is appointed) and to render account of its administration to the Founder and to the beneficiaries.

3. The Protector

The Law on Foundations refers to “supervisory bodies” that are made up of natural persons or bodies corporate. Such bodies generally consist of one person referred to as the “Protector”.

In practice, the Protector is usually the client or someone that he/she trusts. The responsibilities of the Protector are specified in the Foundation Charter. Which include, but are not limited to, the supervision of the Foundation Council.

4. The Beneficiaries

The Foundation’s aims and objectives are generally for the benefit of the foundation’s “Beneficiary” or “Beneficiaries”. Such Beneficiaries have the right to receive the earnings or other interest in the Foundation Assets, and to receive the Foundation Assets as set down in the Foundation Charter.

5. A Foundation’s assets constitute an independent estate

The contributions made to the Foundation and it’s earning may not be attached or be the object of any precautionary action or measure, save for obligations incurred or for damages caused upon achievement of the Foundation’s aims and objectives, or fort the beneficiaries legitimate rights.

The Foundation’s assets may not be used to answer for the Founders obligations nor for those of the Beneficiaries, nor for those of any person, whether or not involved with the Foundation.

Foundation heirs shall have no right to revoke the creation of or the transfers made to the Foundation.

6. A Foundation is protected against the Founder’s creditors

If a Founder’s judgement creditor attacks the assets of the Foundation the law prescribes a 3 year law of limitation.

7. A Private Foundation is created as a Body Corporate

Panama grants corporate existence to a Foundation. Consequently, a Foundation may acquire and own property of all kinds, incur obligations and be a party in judicial proceedings.

8. A Private Foundation may not have profit making objectives

A Foundation may not by law engage directly in business but may carry out business activities in a non habitual manner. Thus, a Foundation may derive earnings from the sale of real property, it may have cash deposits, it may lend money and it may invest in shares of private companies, public companies, bonds etc., but it may not trade.

9. Foundations may be revocable

The Founder may revoke the creation of a Foundation or the transfer made to a Foundation in any of the following circumstances:

1. Where the Foundation has been created to enter into effect after the Founder’s death;
2. Where the Foundation Charter has not been registered at the Public Registry;
3. Where the Foundation Charter is revocable; and
4. Where there is just cause for the revocation of donations in accordance with relevant provisions of the Civil Code of the Republic of Panama.

10. A Foundation is exempt from all taxes

Provided that the contributions received by a Foundation and the income from such contributions originate outside that fiscal territory of the Republic of Panama, a Foundation shall pay no taxes, save for a US$300 Annual Franchise Tax.

11. Foundations may be redomiciled to and from Panama

If the Foundation Charter does not forbid it, the Foundation’s governing body may continue the existence of such foundation, created under the laws of another jurisdiction of Panama. For this, it is only required that a “Certificate of Continuation” containing the following information be registered:

1. The name of the Foundation and the date of constitution
2. The registration or filing of data from the country of origin
3. An express declaration of the Foundation Council’s wish to continue such Foundation in Panama
4. The new Foundation Charter or a transcription of the original Charter
5. A minute of the Foundation Council granting power to transfer/redomicile to Panama