Orca Offshore, Company Formation and Banking Specialists

Panamanian Corporations and Foundations

In Panama ORCA form both corporations and foundations. For banking purposes, there is very little difference. All entities come with everything you need to open both bank and brokerage accounts. Generally, corporations are used for profit ventures involving business activities such as security trading, banking, international business, ownership of assets etc. We find that over 75% of our clients establish corporations although foundations have distinct benefits in some situations. As a rough guide foundations are generally used for non-profit activities such as charities, receiving or giving donations, grants, etc, but can also be used for holding purposes such as holding ownership of corporations or any other type of asset such as a house, boat or car. Some of our clients use a combination of a corporation and a foundation. In this situation the foundation holds the shares in the corporation for additional confidentiality. Although Panama does not form trusts it is worth briefly looking at their uses because clients considering forming a foundation might be ideal candidates for a trust. Trusts are generally used for holding purposes such as owning corporations, or holding assets such as real estate. However, these are simply general guidelines for what each type of entity was initially created for and these guidelines do not have to strictly adhered to as there is no authority in Panama that enforces the uses of each type of entity. One crucial difference between a foundation and a trust is that a foundation is formed in the same way as a corporation although the structuring is different. A Trust can be 100% anonymous and only the lawyer forming the trust, you and ourselves will know the true details of who the parties are. A trust like a foundation is designed for maximum flexibility and can basically do anything from owning assets to controlling companies or signing contracts. In brief, if a person can sign something, own something or carry out a business transaction, so can the Trust. The complication with a Trust arises because an offshore trust is not a judicial person; it is merely a written agreement as to how assets are managed. In simple terms, a trust is a relationship in which a person, called a trustor or settlor, transfers something of value, called an asset, to another person, called a trustee. The trustee then manages and controls this asset for the benefit of a third person, called a beneficiary. A Panama Private Interest Foundation is different from any other legal entity in Anglo-Saxon law because it is not the legal personification of a person or group of persons (as with a corporation), rather it’s a legal entity that does not have owners (share-holders, participants, or partners), it traditionally has a specific purpose for the benefit of a general group of individuals. Complex I know! But the characteristics of these three entities when built into the right structure are the key to maintaining privacy, securing your anonymity and the successful avoidance of tax.