Company and Foundation Registration Services
Incorporation Procedures
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A Private Interest Foundation also includes a body of Regulations, which are like by-laws. Unlike the Charter of the Foundation, the Regulations remain private and confidential, they are not filed in any public registry. Therefore, it is within the Regulations that individuals typically articulate their wishes regarding beneficiaries and distribution of Foundation assets. Additionally, in this private document, a Protector may be named whose role is to oversee the activities of the Foundation Council. The Regulations may be amended at any time.
The range of benefits offered by a Foundation spans from tax advantages to asset protection. Foundations do not pay taxes on any income that is derived from investment activity outside of Panama. Assets used to fund the Foundation are considered under the law to be separate from the assets of the founder. Therefore these cannot be reached in the event of a lawsuit against the founder or beneficiaries. Similarly, these assets cannot be reached to satisfy debts owed by the founder or beneficiaries. Foundations only incur liability to the extent that they have dealt with a party directly. Therefore, if a Foundation conducts no activity beyond owning assets, it will never suffer liability of any kind.
A Foundation is established by a Founder, who may be one or more individuals or corporations. It may be created either directly or through a third party, such as a resident agent. The Foundation may be established during the Founder's lifetime or post-mortem. It is legally established when a Charter of the Foundation (which may alternatively be referred to as a Memorandum or Deed) has been drafted and filed at the Public Registry. The items that must be filed include:
- Name and Purpose of the Foundation.
- Name of the Foundation Council Members.
- Address of the Foundation.
- Appointment of a Registered Agent and
- Patrimony
Panama Companies
LAWS
A corporation may adopt by-laws for the regulation of its internal affairs and procedures, but it is not compulsory. Should by-laws be in fact adopted, however, it is not compulsory that they be registered, but if they are registered, any amendments thereof must also be registered. By-laws may be adopted either by resolution of the shareholders or by resolution of the Board of Directors. Consequently, the by-laws may be amended by the corporate body which initially adopted them.
GENERAL POWER OF ATTORNEY
The Board of Directors may grant a general power of attorney to any person, whether or not connected with the corporation. When said power of attorney is granted to be used abroad, it is possible not to register said power of attorney to maintain the confidentiality.
RESIDENT AGENT
By law every corporation must have resident or registered agent. Our fee for acting as resident agent is satisfactory. However, the first year of the resident agent’s fee is also included in the cost of incorporation.
All annual fees and taxes must be paid promptly every year to maintain the company in good standing. Late payment will produce high penalties and strike off from the Register.
ANNUAL FRANCHISE TAX
Every Panamanian corporation has to pay an annual tax, imposed by law. The law requires corporations to pay said amount in order to remain in good standing. Good standing is taken to mean valid registration at the Public Registry of Panama.
All annual fees and taxes must be paid promptly every year to maintain the company in good standing. Late payment will produce high penalties and strike off from the Register.
An additional penalty caused by non-payment is that documents subject to registration will not be recorded nor will any certification of good standing or others be issued, except when requested by a competent authority.
A comparison of Panamanian companies and Panamanian foundations
The first. IBCs / Companies / Limited Liability Companies, on the other hand, are formed to conduct commercial activities in a habitual and direct manner, whereas Private Interest Foundations cannot engage in commercial activities in a habitual or direct manner, except through IBCs / Companies / Limited Liability Companies. A private interest foundation is formed to protect patrimonial interests, hold shares, or hold assets (including real estate).
The second sentence. The share capital of an IBC / Company / Limited Liability Company consists of shares. The patrimony of a Private Interest Foundation, however, is not composed of shares, but of contributions from the founder.
The third point. In order to form an IBC/Company/Limited Liability Company, a Board of Directors must be composed of three (3) natural persons of any nationality (President, Secretary, Treasurer). Private Interest Foundations must be formed by a Foundational Council made up of one (1) legal person or three (3) natural persons (President, Secretary and Treasurer) of any nationality.
The fourth point. It is the shareholders who own the company in IBC / Companies / Limited Liability Companies, and they will respond based on their share percentage. Shareholders are not listed in any public document. In the Private Interest Foundation, there are no shareholders; instead, there are beneficiaries who are not considered the owners of the foundation; however, under the founding regulations/foundation wishes and under the foundation act, they are legally entitled to receive the patrimony of the Private Interest Foundation.
A comparison of Panamanian companies and Panamanian foundations
The first. IBCs / Companies / Limited Liability Companies, on the other hand, are formed to conduct commercial activities in a habitual and direct manner, whereas Private Interest Foundations cannot engage in commercial activities in a habitual or direct manner, except through IBCs / Companies / Limited Liability Companies. A private interest foundation is formed to protect patrimonial interests, hold shares, or hold assets (including real estate).
The second sentence. The share capital of an IBC / Company / Limited Liability Company consists of shares. The patrimony of a Private Interest Foundation, however, is not composed of shares, but of contributions from the founder.
The third point. In order to form an IBC/Company/Limited Liability Company, a Board of Directors must be composed of three (3) natural persons of any nationality (President, Secretary, Treasurer). Private Interest Foundations must be formed by a Foundational Council made up of one (1) legal person or three (3) natural persons (President, Secretary and Treasurer) of any nationality.
The fourth point. It is the shareholders who own the company in IBC / Companies / Limited Liability Companies, and they will respond based on their share percentage. Shareholders are not listed in any public document. In the Private Interest Foundation, there are no shareholders; instead, there are beneficiaries who are not considered the owners of the foundation; however, under the founding regulations/foundation wishes and under the foundation act, they are legally entitled to receive the patrimony of the Private Interest Foundation.
A comparison of Panamanian companies and Panamanian foundations
The first. IBCs / Companies / Limited Liability Companies, on the other hand, are formed to conduct commercial activities in a habitual and direct manner, whereas Private Interest Foundations cannot engage in commercial activities in a habitual or direct manner, except through IBCs / Companies / Limited Liability Companies. A private interest foundation is formed to protect patrimonial interests, hold shares, or hold assets (including real estate).
The second sentence. The share capital of an IBC / Company / Limited Liability Company consists of shares. The patrimony of a Private Interest Foundation, however, is not composed of shares, but of contributions from the founder.
The third point. In order to form an IBC/Company/Limited Liability Company, a Board of Directors must be composed of three (3) natural persons of any nationality (President, Secretary, Treasurer). Private Interest Foundations must be formed by a Foundational Council made up of one (1) legal person or three (3) natural persons (President, Secretary and Treasurer) of any nationality.
The fourth point. It is the shareholders who own the company in IBC / Companies / Limited Liability Companies, and they will respond based on their share percentage. Shareholders are not listed in any public document. In the Private Interest Foundation, there are no shareholders; instead, there are beneficiaries who are not considered the owners of the foundation; however, under the founding regulations/foundation wishes and under the foundation act, they are legally entitled to receive the patrimony of the Private Interest Foundation.
The fifth. Unlike the S.A., where the protection has control over the founding council's acts, in the Private Interest Foundation this is not the case.
The sixth. When a Private Interest Foundation is formed, a document called the founding regulation or foundation wishes is issued. This is a private document that designates the principal and secondary beneficiaries and what will happen if the principal beneficiary dies.
As far as the SA is concerned, there is no such document, only nominative or bearer share certificates. When it comes to bearer shares, the owner is the holder, while for nominative shares, endorsement is required to transfer them. Bearer shares are transferable without the need for endorsement, while nominative shares require the issuer's endorsement. In either case, the SA must be notified of any transfers. As a result, if the shareholder does not endorse the certificate or even ceases to exist, a trial succession is required. InBy using the Private Interest Foundation, this can be avoided pass it on to a beneficiary, the shares must be declared void and a trial succession must be imposed. This is done in order to ensure that the shares are properly and lawfully transferred to the rightful owner. This process can be time consuming and costly, which is why it is important to plan ahead. The Private Interest Foundation can provide a less expensive and efficient way of transferring shares without the need for a trial succession. This makes it an ideal option for shareholders looking to pass on their shares.r.
This is avoided with the figure of the Private Interest Foundation. This is why it is advisable that when the client operates through an In IBC / Companies / Limited Liability Companies. also constitute a Private Interest Foundation.
