IMPORTANT NOTICE TO US PERSONS: US Persons (residents or citizens of the United States) are required to report all interest in any foreign corporation, trust, or private interest foundation to the US tax authorities. POLS does not offer Panama Private Interest Foundations to US Persons.
The Panama Private Interest Foundation has a Founder, a Council, a Protector, and Beneficiaries. Below we have explained what role each of them plays in the Panama Foundation:
Founder: The Founder is the person or entity that establishes the Panama Private Interest Foundation in the Public Registry of Panama. The founder must sign the Foundation Charter (like the articles of incorporation) which is inscribed to the public registry to incorporate the Foundation. The Founder is technically the “creator” of the foundation, and their name is on public record. Our firm offers the option of using a “nominee founder”, whereby we can appoint a person from our law firm to serve as founder. However, please note that the founder can never be changed, therefore, it is recommended to appoint your own founder.
Council: The Panama Foundation Council serves the same purpose as the board of directors on a corporation. The council are the President, Secretary and Treasurer of the entity, and they are the legal representatives of the Private Interest Foundation who must sign all resolutions of the council. The council members are each registered in the public registry with their names, addresses, and identifications as council members to the Foundation. Our firm offers a “Nominee Foundation Council” to fill the council positions, to provide additional convenience for our clients in the event that they cannot be present in Panama to sign council resolutions when necessary. When we appoint a nominee council, we provide our client with pre-signed, undated letters of resignation from each nominee council member so that our client can replace the council at any time.
Protector: The Protector is the person or entity who ultimately Controls the Panama Foundation and all assets held within it. The Protector is appointed by the Panama Foundation Council when the Panama Foundation is created, however, once the Protector is empowered, the Protector can then remove the council members at any time. The Protector can be appointed privately, through a Private Protectorate Document, signed by the Panama Foundation Council. Once the Protector is appointed, it can always be changed per the Protectors wishes.
Beneficiaries: Unlike a corporation that issues share certificates to certify who the owners are, the Panama Private Interest Foundation does not have owners, rather it has Beneficiaries. The Panama Foundation 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). 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 Panama Foundation assets should be handled or distributed upon a triggering event such as the death or incapacity of the Protector. The Letter of Wishes should also state whether the Panama Foundation should continue existing, and have a new Protector appointed, or if the Panama 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 Resident Agent should hold a signed copy of the Letter of Wishes.
Foundation By-Laws: The Panama Foundation does not need to have Foundation By-Laws, since a Letter of Wishes is 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 notarized by a Panamanian notary, then one can request the assistance of a Panamanian attorney to draft the Foundation By-Laws. The Foundation By-Laws essentially handle the same function as a Letter of Wishes since the Foundation By-Laws should specify exactly how the Foundations assets should be handled or distributed upon a triggering event such as the death or incapacity of the Founder, and/or Protector. The By-Laws should also state whether the Panama Foundation should continue existing, and have a new Protector appointed, or if the Panama Foundation should be dissolved upon or within a certain time frame from the date of the specified triggering event(s). There is a specific format that the Foundation By-Laws must be written, yet the contents of the By-Laws can be changed at any time after the Panama Foundation is incorporated, per the Founder or Protectors wishes. The Foundation By-Laws can be held privately, or can be registered publicly.