Panama Private Foundation (hereinafter known as
PIF) has its origins in the Law 25 of 1995, which
in turn was inspired in the PGR or better known
as the “Liechtenstein Persons and Company
Act”, that contains one of the first references
to the private non profit foundations. In Panama,
this and the most recent innovations in the Anglo-Saxon
Trust enabled the creation of the Private Foundation
utilizing the best features and characteristics
of both worlds.
A
PIF is a legal entity that can be created by either
a natural person or a corporation that later transfers
part or all of his/her assets to the Private Foundation
so they can be managed and protected in favour
of the Beneficiaries.
USES OF PIF
We
must comment that several or all uses mentioned
above can be given to a particular PIF, there
are no restrictions as to the objects or uses
one PIF can be given. For example, one PIF can
be created to protect assets, but also with a
testamentary use or in any case, with all the
above-mentioned uses. However, a PIF cannot engage
in commercial or for profit activities as a day-to-day
activity.
ADVANTAGES
Notwithstanding the creditors of the Founder
or of a third party shall have the right to
contest the contribution or transfer of assets
to a foundation when such transfer constitutes
an act in fraud of the creditors. The rights
and actions of such creditors shall lapse at
the expiration of three (3) years, counted from
the date of the contribution or transfer of
the assets to the foundation was done
The
transfer of unmovable property, titles, certificates
of deposits, assets, funds, securities or shares
carried out by reason of the fulfillment of the
objectives of the foundation or the termination
of the same, in favor of relatives within the
first degree of consanguinity or the spouse of
the Founder shall also be exempted from all taxes.
INFORMATION OF PUBLIC AND PRIVATE KNOWLEDGE
The
only information made public are the names of
the Founder, the member (s) of the Foundation
Council and the name of the Protector, this last
if it is so established on the Foundation Charter,
as the Protector can be appointed by means of
a private and confidential document.
The
Foundation Regulations are for internal purposes
of the Foundation and are not a matter of public
records. Information regarding names of beneficiaries
and of the protector and method for distribution
of assets can be contained within the Regulations,
thus will not be publicly disclosed.
CONFIDENTIALITY
The
Law 25 of 1995 innovates in this field when it
stipulates on Article 35 that all the members
of the Foundation Council, Protector, public or
private servants that have knowledge of the activities,
affairs, transactions and operations of the PIF
must maintain reserve and confidentiality at all
moments. Violation of these Articles carries a
sanction of 6 months of jail time and a fine of
Fifty Thousand Dollars (US$50,000),
without prejudice to the civil liabilities.
PRIVATE FOUNDATIONS vs. TRUSTS
Private Foundations and Trusts
have clear differences:
PIF’s are based on Civil Law and they are
constituted by means of a public legal document
and filed for registration, it is in fact, an
existing legal entity, whereas a Trust is based
on Common Law and are established by means of
a private contract that does need to be filed
with any government agency, it is not an existing
legal entity, it is in fact a legal contract.
Another difference is that the Foundation Charter
does not need to specify the rights and obligations
of every party involved that can be done by means
of a private and confidential document, while
a Trust deed has to be very specific and clear
regarding the rights and obligations of the Trustee.
In a PIF the assets are placed to the Foundation's
name at the time of the transfer, while in a Trust,
it is the Trustee who receives the assets to his
or her name.
As for administration fees, those of an estate
in a Foundation are low, while in a Trust, the
Trustee fees depend on the value of the estate:
the heftier the estate, the bigger the fees.
AVIABIZ
A member of AVIA and SLOGOLD Group S.A.
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