PRIVATE INTEREST FOUNDATIONS

Besides offering investors the opportunity to create a Panamanian corporation, our national laws allow the establishment of private interest foundations.

Law number 25 of June 14th, 1995 grants our country the legal structure for the incorporation of Private Interest Foundations. This figure is derived from the successful Liechtenstein Familiar Foundations.

Private interest foundations are defined as legal entities widely used for family affairs and capital planning. Their objective is the acquisition of assets in order for them to be administered and kept in the will of the founder. Its consequential effects may take place during life or after death of the founder.

Private interest foundations are considered by many as a merge between trusts and corporations. Nevertheless, unlike the trust, the private interest foundation is not a contract; due to the fact that since the date of its registration in the public registry it obtains a legal standing, creating liabilities before third parties. Unlike corporations, private interest foundations lacks of an owner and shareholder. It is incorporated through the will of the founder and in favor of a beneficiary; who may be kept in total anonymity according to our legislation, since it does not has to be registered in Panama’s Public Registry.

Advantages

The following are some of the advantages and characteristics of Private Interest Foundations:

- They offer a fiduciary structure for transferences and active disposal

of assets to the beneficiaries, even after the death of the founder, maintaining control of the assets.

- The assets of the foundation become legally independent and do not

become part of the private patrimony of the founder. Those assets cannot be seized or be subject to any action or preventive measure, except when such action or measure is related to liabilities or damages that may result from the execution of the foundation’s objectives.

- Private interest foundations are tax exempted from:

a- Taxes produced by its constitution, amendment or dissolution,
b- Transference or mortgage of the foundation’s assets and the

income that results.

- Foundations incorporated according to a foreign country laws may

continue operating in Panama. Likewise, the foundations incorporated according to Panamanian Laws, may continue operating according to other countries laws.

- Foundations also produce a sense of reserve and confidentiality

equivalent to codified bank accounts and fiduciary agreements.

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