Offshore Panama Foundations
What is a Foundation?
A Panama Private Interest Foundation is an entity that is crossbred between a trust and a corporation. Characteristics of a Private Interest Foundation in Panama:
-
A legal entity that does not have owners.
-
Setup to benefit a specific group of individuals, known as beneficiaries.
-
Offers clear advantages for international estate planning.
-
Ultimate in privacy and protection of assets.
-
May not engage in commercial profit generating activities as a corporation can. The Foundation may make profits by investing in stocks, mutual funds, bonds etc., however these profits must then be for the benefit of beneficiaries of the Foundation.
-
Can be used for transferring funds offshore or receiving funds from offshore.
-
Used to hold assets such as corporations, trusts, bank accounts, real estate or other assets.
A Panama Private Interest Foundation is often used by people who wish to control a foreign corporation, such as an IBC, however, do not wish to own their corporations directly themselves. This effectively is a way around the Controlled Foreign Corporation (CFC) rules in their home countries.
Some countries have CFC rules that require its residents to declare theownership they have in foreign corporations. By using a Panama Private Interest Foundation, then ownership of an IBC will be with the Foundation. The company shares are then issued to the Foundations' name.
A Private Interest Foundation consists of the following:
-
Founder: The person or entity that originally establishes the Foundation. This will usually be the agent who goes to the public registry. The Founder has no influence over the control of the Foundation.
-
Council: Similar to the board of directors for a corporation. The names and addresses are registered in the public registry, hence we recommend a Nominee Foundation Council for Clients. The Nominee Foundation Council has no control over the Foundation or any of its assets. Clients who choose to use a Nominee Foundation Council will receive pre-signed and undated resignation letters from each Nominee Foundation Council member. This allows members to be replaced at any time.
-
Protector: The person or entity that controls the Foundation and all assets held within. The Protector can remove the Foundation Council members at any time without the consent from anyone else.
-
Beneficiaries: As a Foundation does not have owners, it will instead have beneficiaries. This is similar to a corporation having shareholders. A Panama Foundation is often setup that the Protector is the sole beneficiary, and upon death, the Foundation continues with a new Protector.
-
Letter of Wishes: A simple letter that states how the Foundations' assets are to be managed and distributed upon an event being triggered such as death or incapacity of a Protector. The Letter of Wishes can be changed at any time, and held privately with the Protector.
How long does it take to incorporate or setup a Foundation?
Upon receipt of your setup fee, and lodging the required application forms to the local government in Panama, you can expect your IBC or Foundation to be setup within 4-5 days. Your documents will then be shipped to you via Courier.
Which is better? An IBC or a Foundation?
An IBC and Foundation are different entities setup to achieve different goals. If you do not engage in commercial activities to make a profit, then we suggest a Foundation to protect your assets. If you engage in commercial activities to make a profit, then we suggest an IBC. Offshore IBC owners may then further consider a Panama Foundation to hold their assets in total privacy and transfer profits from their existing IBC business.
