What is a Panama Private Interest Foundation?

INTRODUCTION As per 1995, the Republic of Panama enacted legislations that allows the necessary legal framework to enable the incorporation, registration,  management and continuation from other jurisdictions  of Private Interest Foundations. The PIF Law is Law Number 25 of 1995 which has been dully approved by means of the National Constitutional Assembly process, which enables it to contain all the necessary juridical grounds  concerning all aspects of the Panamanian Private Interest Foundations. DEFINITION Panamanian Private Interest Foundation is a juridical entity which created upon the will of one or more persons know as  (the « Founder(s) »), physical persons or legal entities, which appear before a notary and subscribe a document known as «Foundation Deed », which is   then registered at  the Panama Public Registry, the Founder(s) is/are then obliged to form a patrimony in favor of the Foundation, which should be managed by the Foundation Council (what is known in a company as a Board of Directors) in accordance to the conditions established in the Foundation Deed, which in turn must be always focused towards the wellbeing of the  (the « Beneficiaries ») of the Private Foundation . MAIN CHARACTERISTICS OF THE PANAMANIAN PRIVATE INTEREST FOUNDATIONS The Founder(s) are obliged to give in or donate a patrimony or assets to the foundation. The assets and worldly assets of the Foundation constitute  an totally   independent patrimony from the private assets  of the Founders, and to that effect of the members of the Foundation Council and of the Beneficiaries. There are no limits as to the provision or sharing in of the patrimony, regardless  it is cash, goods or other nature. Be no mans it is a mandate of the law to make public such donations . The rules and undertakings for the management of the Foundation are contained in the Regulations or (Trust Deed) , which have no need nor will be registered at any public office in the Republic of Panama,  thus to remain and be kept in confidential custody of Beneficiaries . The regulations serves as a testamentary vehicle ( or Trust Deed)  which provides the Founder(s) the possibility to establish the succession route of the assets owned by the Foundation and those conditions relating to his/her succession. THE CREDITORS The Foundation´s assets are protected by law from the Founder(s)’ creditors. Once the Founder undertakes the donation of his assets or part of his patrimony into the foundation, it then no longer has any relation nor future powers of disposition over such assets. The Private Interest Foundation law establishes that such entity should not engage in customary commercial activities, other than those that will be directed towards increasing the value of the assets of the foundation , all in benefit of the beneficiaries . Panama Foundations of Private Interest are not bound to be taxed on activities which have been carries out of the territory of Panama , however do have an annual renewal tax fee of USD. 400.00, payable at  registration anniversary Applicable legislation for Panama Foundations, is Panama law, however the founder or within the articles of incorporation it can be established that the applicable legislation in case of any dispute will be that of another country. (laws of arbitration tribunals) A key feature among the Foundations may be revocable or irrevocable to its Founders will, being necessary to establish such criteria among the articles of incorporation. In general terms,  stating such in the articles of association will allow the founder at certain point revoke his will or not have such possibility   In general terms the  Foundations are irrevocable, but they can be revoked by its Founder(s) under certain conditions , to wit:

It is to be understood that the revocable Foundations are those in which the Founder(s) has/have full powers to create and also  to revoke the creation of the Foundation, to make decisions in favor of or and to remove the beneficiaries or re appoint beneficiaries, while the irrevocable Foundation  is that in which the Founder(s) creates the Foundation, provides assets , but can later make no further decision as to retrieving them COMMON AND PRACTICAL USES   By Ismael Gerli – Gerli & Company

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