Foundations of Private Interest in Panama

Private Interest Foundations at J. Gavrilidis

The law that regulates Private Interest Foundations in Panama is Law No. 25 of 1995. Panamanian foundations are a useful legal structure under civil law for wealth management and estate planning.

For all legal purposes, the assets of the private interest foundation shall constitute a separate estate from the personal assets of the founder. Therefore, they may not be seized, attached, or subject to legal action or precautionary measures, except for obligations incurred or damages caused in the pursuit of the foundation’s purposes or objectives, or for legitimate rights of its beneficiaries. In no case shall they be liable for the personal obligations of the founder or the beneficiaries.

One or more natural or legal persons, either individually or through third parties, may create a private interest foundation in accordance with the formalities prescribed by the law that regulates it. To do so, it is necessary to establish an estate exclusively dedicated to the objectives outlined in the founding act. The initial estate may be increased by the creator of the foundation, referred to as the founder, or by any other person.
Foundations cannot be used for commercial purposes, but they may maintain an interest in a company engaged in commercial activities and are subject to the current Anti-Money Laundering Regime in Panama.
By law, it is mandatory for all individuals who are involved with the foundation to maintain confidentiality. Any unauthorized disclosure in this regard will be subject to legal penalties.
The entity responsible for the administration of a Private Interest Foundation is the Foundation Council, which consists of a minimum of three adults. A company can also act as the founder and sole member of the Foundation Council.
The Private Interest Foundation may have one or more protectors. According to the foundation law, it is the role of the Protector to oversee and, if necessary, intervene in the actions of the Foundation Council. The Protector may also have voting rights in the decisions of the Foundation Council.

Establishment of a Private Interest Foundation

Private interest foundations can be established to take effect either from the moment of their creation or after the death of their founder, through any of the following three methods:
  1. Through a private document signed by the founder, whose signature must be notarized by a public notary in the place of its establishment.
  2. Directly before a public notary in the place of its establishment.

Regardless of the method of establishment, the formalities established by the law that regulates private interest foundations must be complied with for their creation.

What should the Private Interest Foundation deed contain?

  1. The name of the foundation, which must include the word ‘foundation’ to distinguish it from other natural or legal persons of a different nature.
  2. The initial endowment of the foundation, expressed in any legal currency, which in no case shall be less than an amount equivalent to USD 10,000.00.
  3. The designation, including the address, of the member or members of the Foundation Council, to which the founder may belong.
  4. The address of the foundation.
  5. The name and address of the resident agent of the foundation in the Republic of Panama, who must be a lawyer or a law firm, and who must endorse the founding deed before its registration in the Public Registry.
  6. The purposes of the private interest foundation.
  7. The method of designating the beneficiaries of the foundation, which may include the founder.
  8. The reservation of the right to amend the founding deed when deemed necessary.
  9. The duration of the foundation.
  10. The purpose that will be given to the assets of the foundation and the method of liquidation of its estate in case of dissolution.
  11. Any other lawful clause that the founder deems appropriate.
The foundation may acquire and hold property of all kinds, incur obligations, and be a party to administrative and judicial proceedings of all kinds, in accordance with the provisions applicable.

The existence of legal provisions regarding inheritance matters in the domicile of the founder or beneficiaries shall not be enforceable against the foundation, nor shall it affect its validity or hinder the attainment of its objectives as outlined in the founding deed or its regulations.

At Gavrilidis, we specialize in Private Interest Foundations in Panama, providing detailed and personalized guidance to ensure that your foundation complies with all legal requirements. Our team of experts understands the complexities of Panamanian legislation, and we are committed to delivering effective and efficient solutions for the management and protection of your assets. 

Specialists in Private Interest Foundations

Some of our specialists