On June 14, 1995, Law No. 25 regulating Private Interest Foundation or Family Foundation was enacted in the Republic of Panama. The initiative to create this new juridical instrument, originates from the success in Europe of the so called "Liechtenstein Stiftung" or family foundation of Liechtenstein.

The Private Interest Foundation is an Administrator of Versatile Patrimonies which replaces the objectives of creating corporations, trusts and even wills, because it arises in the juridical area with its own personality, capable of acquiring separate rights and obligations from those of its founder and with limited responsibility to the amount of the Foundation's Equity.

The foundation has no profit objective, but to comply with the objectives and purposes of the founder. For example, the pater familia who wishes to guaranty the education of his children creates a foundation, aiming to the assurance, that in the event of his death, they could continue their Studies.

OPERATION IN PANAMA OF PRIVATE INTEREST FOUNDATION
They are created by the Founder, who may be a natural or juridical person, through a document denominated Foundation Act, wherein he states his will and the legal manner to comply with same, even after his death.

The Foundation Act may be constituted by means of a private document signed by the founder, whose signature must be authenticated by a public notary of the place of constitution or directly, by means of a Public Deed. In the event the foundation is created to become effective after the death of the founder, the previous formalities for the granting of a will are not required, therefore also saving the corresponding expenses of probate proceedings. The Foundation Act must be officially registered in a notary office of the Republic of Panama and the registration in the Public Registry shall grant the Foundation its legal capacity.
For its registration in the Public Registry, the Foundation Act must contained:

1. The name of the Foundation
2. The initial capital which may not be less than an equivalent amount to $10,000.00
3. The designation of the members of the Foundation Council, which must comprised three members if they are natural persons and in the case of a corporation, same may be the sole member of the Council. This Council is in charged of the administration of the Foundation, always in accordance with the provisions of the Foundation Act as its aims and objectives. The founder may be a member of the Foundation Council.
4. The domicile of the foundation
5. The Resident Agent, who must be a lawyer or lawyers' firm with domicile in Panama.
6. The objectives of the Foundation, asserting the will of the founder
7. The manner of designating the beneficiaries.
8. The reserve of the right to modify the foundation act.
9. The duration of the foundation, which may be indefinite, but always subject to the existence of the patrimony.
10. The destination of the assets of the foundation and manner of liquidating the patrimony, in the event of dissolution .
11. Any lawful clause that the founder deems convenient

DOCUMENTS REQUIRED FOR THE REPATRIATION OR REDOMICILE OF FOUNDATIONS ALREADY ORGANIZED, TO PANAMA:

1. Continuation Certificate, issued by the entities that according to their internal regime correspond in accordance to the requisites established in our legislation;
2. Copy of the original Constitution Act of the Foundation with any subsequent amendment and;
3. Power of attorney granted to a Panamanian lawyer to carry out the transactions to make effective the continuation of the foundation in Panama.

The recent Panamanian Law introduced in our legislation, almost in its totality, the principles contained for Family Foundations in the Law of Persons and Corporation of Liechtenstein of 1926. It is an invitation to register or re-domicile in our country, considering the imminent disadvantages that the adhesion of Liechtenstein to the European Community may carry; such as the elimination of the confidentiality barriers, one of the main privileges offered by the Principality.

ADVANTAGES OF A PRIVATE INTEREST FOUNDATION IN PANAMA

1. FISCAL PARADISE. Our legislation in fiscal matters, is based on the concept of territoriality of the income tax, according to which the operations which are perfected or become effective outside the Republic of Panama are not taxable.
2. TOTAL ANONYMITY. Normally, a Foundation is created by a natural persona as the founder member, but those interested in preserve total anonymity on the property of the capital donated to create the foundation, may do so through Corporations as the founder member, which allows to appoint third persons to the Board of Directors of the Corporation, thus keeping total confidentiality on the natural persons behind the Foundation. Further, fines of up to FIFTY THOUSAND DOLLARS ($50,000.00), are established for those officials that having knowledge of the activities and subjects of the Foundation do not keep due reserve.
3. THE MEMBERS OF THE COUNCIL HAVE LIBERTY TO CHOOSE THEIR DOMICILE. Our Legislation does not required that any member of the Foundation Council should have his domicile in Panama, it only requires that the Resident Agent, who must be a lawyer or lawyers' firm, resides in the Republic of Panama.
4. SPECIAL LEGAL REGIME. In Panama, at the death of the founder, the foundations are not open to refutation by heirs and creditors, because the transference of the Patrimony to the Foundation is considered irrevocable in matters of inheritance and the prescription to exercise a revocation action due to fraud by creditors is reduced to three (3) years.
5. COMPLETE LIBERTY TO DESIGNATION . The only restriction to the name designating the Foundation is that there is no other Foundation with the same name previously registered in Panama.
6. LIBERTY OF LANGUAGE. It is allowed that the Foundation Act be written in any language, provided always that it is registered together with a translation into Spanish.