|
|
|
|
|
PANAMA
Corporations and Foundations
In
Panama we form both corporations and foundations. For banking
purposes, there is very little difference. All entities come
with everything you need to open bank or brokerage accounts.
Generally, corporations are used for profit ventures involving
business activity such as security trading, banking, international
trade, ownership of assets etc. Most of our clients establish
corporations. Foundations are generally used for non-profit
activities such as charities, receiving or givin donations,
grants, etc, but can also be used for holding purposes such
as holding ownership of corporations or any other type of
asset. Most of our clients use foundations to hold ownership
of thrie corporations for additional confidentially and asset
protection. Trusts are generally used for holding pruposes
such as owning coporations, or holding assets such as real
estate. However, these are simply general guidelines for what
each type of entity was initally created for and these gudelines
do not have to strictly adhered to as there is no authority
in Panama that enforces the uses of each type of entity
|
back to top
General
information about Panama corporations.
Panama offers
the most favourable and most flexible incorporation laws,
available in the world. Panama corporations are used by
individuals from all over the globe who are interested
in assest protection, tax minimization, privacy, investment
diversification, affordability and convenience.
Panama
corporations can be used for international trade, to settle
trusts or foundations, to establish and own bank or brokerage
accounts, or hold ownership of real estate or any other
type of asset. In some cases, Panama corporations are
formed for very private and confidential business transactions
such as the movement of funds to another jurisdiction
for the protection of assets.
|
Panama offers some of the strictest corporate book and banking
secrecey laws available in the world, therefore providing
legal protection to your assets and your identity thoughthe
confidentiality of corporate business and banking transactions.
Most other offshore jurisdictions, such as the British influenced
countries, have vowed down to recent legislation that has
begun the removal of bank secrecy in those British colonies
around the globe. Panama is a totally soverign nation, not
governed or controlled by any other country in the world.
|
|
back to top
History
of Panama foundations
The Panama private interest foundation is a type of entity
that is a cross-breed between a trust and a corporation, however,
it is neither. A foundation is an entity that is different
from any other legal entity known in anglo-saxon law becuase
it is not the legal personification of a person or a group
of persons (as witha corporation), rather it is a legal entity
that does not have owners (shareholders, participants or partners),
and it traditionally has a specific purpose for the benefit
of a general group of individuals.
The
concept of a foundation began during the Roman Empire, under
the influence of Christianity. As an example, the catholic
church ws considered a divine foundation, and the various
sub-organisations within the church had the legal control
for administrating its patrimony. The original foundations
were not created for serving a private need for a specfic
individual person or family, rather they were formed for serving
the needs of a community. Several centuries later, the legal
entity denominated as a foundation continues to exist and
is widely used and accepted around the globe for personal
and private needs.
The
concept of a private interest foundation began when the principalty
of Liechtenstein created the ‘Law of Persons & Companies’,
the 20th of January, 1926 (Personen und Gesellschaft Recht
- P.G.R) which created the ‘family foundationrsquo;
(for the private benefit of the members of one or more families)
and the ‘mixed foundationrsquo; (for the private benefit
of not only families, but also for other persons or institutions).
|
Historically, wealthy families in Europe have established
Family Foundations incorporated in the Principlaity of Leichenstein,
Switzerland, and Luxembourg. The Panamanian government carefully
designed the Panama Private Interest Foundation with the
intentions of creating a more moder, more flexible and more
affordable estate planning vehicle for people from around
the globe. The assets of the Panama private interest foundation
take on a seperate legal identity from the personal assets
of the founder, protector council or beneficiaries.
The
Panama private interest foundation offers clear advantages
for international estate planning, providing the ultimate
in privacy, anonymity, and protection to the proctectors,
Founders, and Beneficiaries of the Foundation. The Panama
Foundation is a solution to a global need for an affordable,
anonymous, flexible, private, estate planning vehicle that
can be used to hold assets such as corporations, trusts,
bank accounts, investment accounts, real estate, or any
other type of asset.
A
Panama Private Interest Foundation comes into existence
upon registration in the Public Registry. No approval from
any public authority is required. Law
No. 25 of June 12, 1995 regulates Panama Private
Interest Foundations.
|
back to top
Uses
of Panama foundations
Panama
Private Interest Foundations may be established for the
benefit of a person or persons, a family, or a specific
social purpose.
In
general, Panama Private Interest Foundations are used by
people who wish to control and maintain ownership of foreign
corporations, however, they do not wish their corporations
themselves directly, due to the Controlled Foreign Corporation
(CFC) rules in their own countries. Several highly taxed
countries such as the UK, Canada, USA, Australia, New Zealand,
France, Italy, Spain, etc, have CFC rules which require
that their citizens submit declarations (reports) to the
appropriate tax authorities, in which they decalre that
they are the shareholders of such foreign countries.
Instead
of holding the corporations shares in their personal name
or in bearer form, they establish a private interest foundation
in Panama that holds or owns the shares of their foreign
corporation(s), thus avoiding the CFC reporting rules. Hence,
the advantage of using the foundation as a shareholder for
their corporation is to remove ownership from ones personal
name (or through a bearer share arrangement), and transfer
ownership to the name of a foreign entity which does not
have owners, rather has privately appointed beneficiaries,
which are anonymous. In this way, there is no question as
to who owns the company, since the company's shares are
issued to the Foundations name.
|
|
Another advantage of utilising the foundation as a shareholder
applies in the following scenario: In many cases, when opening
corporate bank accounts or investment accounts, the financial
institutions require that you reveal the beneficial owners
of the corporation. Through the foundation ownership strategy,
one can state that the Foundation is the owner of the coporation.
Again, the objective is to remove ownership from their personal
name, to the name of a foreign entity whose ownership is anonymous.
The
Panama Foundation provides additional advantages other than
just ownership. For example, the Panama foundation can be
useful in transferring funds offshore or receiving funds from
offshore. In some cases, people use Panama foundations as
vehicles for these purposes. Some people donate their funds
to their panama Foundations and later use the foundation to
give educational or special grants to their children, grandchildrem
or anyone else they choose. The advantage in this case, is
to avoid fiscal regulations surrounding donations, where some
governments impose ‘gift taxes’ and exhaustive
reporting requirements.
In
general, Private Investment Foundations may not engage in
habitual profit making commercial activities as a corporation
can. Nevertheless, they may carry out commercial activities
from time to time, as long as the profits of those activities
are used for the objectives of the foundation. For example,
a private interest foundation may engage in banking or investment
activities, such as investing in bank time deposits (Certificates
od Feposit - CD's), stocks, bonds, mutual funds, options,
money markets, etc, so long as the proceeds from these investment
activities are for the benefit of the beneficiaries of the
foundation.
|
|
back to top
Elements
of a Panama Interest Foundation
The
foundation has a founder, a council, a protector, and beneficiaries.
Below we have explained what role each of them plays in the
foundation:
- Founder:
The founder is the person or entity that establishes the
foundation in the Public Registry of Panama. Our company
is generally the founder of each foundation that we establish,
since it is our company that goes to the public registry
to incorporate the foundation. The founder has no influence
over the control of the foundation, and is only recognised
as the individual who presented the foundation articles
in the public registry when the entity was originally registered
- Council:
The foundations council serves the same purpose as the board
of directors on a corporation. The council members are each
registered in the public registry with their names, addresses,
and identifications as council members to the foundation.
We usually appoint a ‘Nominee Foundation Council’
to fill the council positions, so to provide additional
privacy and confidentiality for our client. When we appoint
a nominee council, we provide our client with presigned,
undated letters of resignation from each nominee council
members so that our client can replace the council at any
time. The nominee council has no control over the foundation
or any of its assets, they are only there to fill in the
blanks in the public registry.
|
- Protector:
The protector is the person or entity who ultimately controls
the foundation and all assets held within it. The protector
is appointed by the foundation council when the foundation
is created, however, once the protector is empowered, the
protector can then remove the council members at any time
without the consent of anyone else. The protector can be
appointed privately through a private protectorate document,
signed by the foundation council. Hence, the protector can
maintain this position free of public knowledge
We generally appoin out client as protector of the foundation,
through a notarizes private protectorate document so that
our client maintains complete control over the foundation,
in a private and anonymous manner. Once the protector is
appointed, it can always be changed per the protectors wishes.
However, a protector is not required and if you prefer,
you can choose to not use a protector, or to use a nominee
protector.
- Beneficiaries:
Unlike a corporation that issues share certificates to certify
who the owners are, the Panama private interst foundation
does not have owners, rather it has beneficiaries. The foundations
beneficiaries are appointed by the protector through either
a simple, privately written letter of wishes, or through
a more formal set of foundation by-laws (foundation by-laws
should be written with the assistance of a Panamanian Attorney).
Either way, the privacy and confidentiality of beneficiaries
can be protected through the appointment in the letter of
wishes, or by-laws of the foundation, since the contents
of the letter of wishes or by-laws may remain private and
need only be known to interested parties. Also, a Panama
Foundation may be set up so that the protector is the sole
beneficiary until his or her death, at which time the foundation
continues for the benefit of other beneficiaries.
|
- Letter
of Wishes: The letter of wishes is a simple letter,
written by the protector, which specifies exactly how the
foundation assets should be handled or distributed upon
triggering event such as the death or incapacity of the
protector. The letter of wishes should also state whether
the foundation should continue existing, and have a new
protector appointed, or if the foundation should be dissolved
upon the death of the protector. There is no specific format
that the letter of wishes must be written, and it can be
written or changed at any time after the foundation is incorporated,
per the protectors wishes. The letter of wishes can be held
privately, or can be registered publicly. Generally, most
people prefer to maintain the letter of wishes privately,
so that the beneficiaries and protector remain anonymous
and private.
- Foundation
By-Laws: The foundation does not need to have by-laws,
since a letter of wishes os legally sufficient for expressing
the protectors requested testamentary instructions. However,
if one wishes to have a more formal foundation testamentary
document, written and signed by a Panamanian Attorney, and
notarised by a Panamanian notary, then one can request the
assistance of a Panamanian Attorney to draft the foundations
by-laws. The foundaation by-laws essentially handle the
same function as a letter of wishes ince the by-laws should
specify exactly how the foundations assets should be handled
or distributed upon a triggering event such as the death
or incapacity if the protector. The by-laws should also
state whether the foundation should continue existing, and
have a new protector appointed, or if the foundation should
be dissolved upon the specified triggering event(s).
There is a specific format that the by-laws must be written,
yet the contents of the by-laws can be changed at any time
after the foundation is incorporated, per the protectors
wishes. The by-laws can be held privately, or can be registered
publicly. Generally, most people prefer to maintain the
by-laws privately, so that the beneficiaries and protector
remain anonymous and private.
|
|
back to top
Fees
| Incorporation
Fee |
£595 |
$1040 |
€850 |
| Annual
Fees |
£400 |
$700 |
€572 |
due
on anniversary of company |
| Formation
Feeds Foundation |
£999 |
$1699 |
€1399 |
| If
you require an internet domain registration to accompany
the formation click
here |
|
|
|
