Panama Foundations
Atlas Offshore Panama.

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Atlas Panama

Summary of Law

Atlas Panama - Yatch and Ship Registration While this is not an official translation of the law, it is intended to be a convenient reference guide to understanding each of the articles.


A private Foundation may be constituted by one or more natural or juridical persons, acting in their own name or through another. An endowment, or patrimony, must be made at the time of creation, which is provided for in the Foundation charter.
The original endowment may be supplemented by the Founder, or by any other person.


A Foundation shall be governed by its charter and its regulations, as well as by the provisions of Law No. 25, and any other relevant legal and regulatory provisions.
The provisions of the Title II of Book I of the Civil Code shall not apply to private Foundations.


Private Foundation sahll not be profit oriented. They may nevertheless engage in commercial activities from time to time or exercise rights deriving from the ownership of business capital, when such capital constitutes a part of the Foundation's assets. However, the economic consequence of the ownership of such business capital shall comply with the stated objectives of the Foundation.


Private Foundations may become effective at the time that they are constituted or upon the Founder's death if either one of the two alternatives below are satisfied:

1. The Founder constitutes the Foundation by private document, with his signature

authenticated by a notary public at the place of constitution, or

2. The Founder constitutes the Foundation in a place other the place of constitution in the presence of a notary public.

If a Foundation is created to become effective after the Founder’s death, none of the formalities that accompany the execution of wills shall apply.


The Foundation charter shall contain:

1. The name of the Foundation in any language with characters of the Latin alphabet. The names shall not be identical or similar to any other existing Foundation in the Republic of Panama. The name shall include the word Foundation to distinguish it from natural persons and other varieties of juridical persons.

2. The Foundation's initial capital may be in any currency in an amount equivalent to US$ 10,000.00.

3. The name and addresses of the Foundation Council.

4. The domicile of the Foundation.

5. The registered agent’s name and address. This person must be a Panamanian attorney or law firm. The resident agent must countersign the Foundation charter prior to its registration at the Public Registry.

6. The purposes or objects of the Foundation.

7. The manner in which Foundation beneficiaries are named.

8. The reservation of the right to modify the Foundation charter when deemed convenient.

9. The length of time during which the Foundation shall endure.

10. How the foundation assets shall be disposed of at liquidation.

11. Any other lawful clauses which the Founder may consider necessary.


The Foundation charter and amendments may be drafted in any languages using the Latin alphabet. Prior to filing at the Public Registry, the regulations regarding registration of acts and titles requires that such documents be notarized in the Republic of panama. If a Foundation charter or amendments are not in Spanish, they must be notarized and placed in deed form, with a certified Spanish translation.


Amendments to the Foundation charter shall be executed and signed in accordance with the provisions of the Foundation charter. An amendment shall indicate the date of its execution, the names o the person or persons executing the amendment and te authenticated signature of such person or persons, authenticated at the place of execution.


Private Foundations are required to pay registration fees and annual taxes at a rate equivalent to those for corporations, as set forth in articles 318 and 318 A of the Fiscal Code. Additionally, the procedure and form of payment, the surcharge for late payment and the consequences of non-payment apply to Foundations.


The filing of the Foundation charter at the Public Registry is sufficient to give it juridical personality. The filing at the Public Registry also constitutes notice of its existence to third parties. A Foundation may own assets, incur obligations and be a party to administrative and judicial proceedings of any nature.

ARTICLE 10 At such time as a Foundation has acquired legal status, the Founder or any third party who has agreed to contribute assets to the Foundation, shall formalize the contribution of the promised assets. When the Foundation's constitution is triggered by the Founder's death, it shall be deemed to have existed prior to death, for the purpose of any donations that the Founder may have made to the Foudation before death.


The assets of the Foundation shall constitute an estate separate from the Founder’s personal assets for all legal purposes. As a separate estate, Foundation assets cannot be seized, attached or made subject to any precautionary action or measure with respect to actions undertaken by the Founder, council or beneficiaries. Creditors and plantiffs may only reach Foundation assets when the Foundation has itself incurred obligation, or caused damage in attempting to fulfill the Foundation objectives. In no case shall such assets be affected or used to respond for the personal obligations of the Founder or beneficiaries.


Foundations shall be irrevocable except in the following cases:

1. The Foundation charter has not been filed with the Public Registry.

2. The Foundation charter stipulates that it is revocable and

3. For any of the reasons articulated in the Civil Code pertaining to revocations.

The transfer of assets made to Foundations shall be irrevocable by the person who made the transfer, unless it is expressly stated otherwise in the act of transfer of such assets.


When a Foundation has been cosntituted to be effective at the time of the Founder's death, the Founder shall have the exclusive and unlimited right to revoke it.

Following the death of the Founder, the Founder's heirs shall not have the right to revoke the Foundation's creation or transfer of assets to the Foundation. This shall hold true without regard to whether the Foundation has been registered at the Public Registry before the death of the Founder.


The legal provisions regarding inheritance in the Founder's or beneficiaries domicile shall have no effect or impact on a Foundation. The law of an outside jurisdiction shall no prevent the attainment of a Foundation’s purposes as they are articulated in the Foundation charter or regulations.


The Founder's creditors can contest a transfer of assets to a Foundation when the transfer has been made to defraud creditors. However, this right expires three (3) years after the date of the transfer in question.


The patrimony of the Foundation may derive from any lawful trade or business an may consist of assets of any kind. The transfer of assets to the estate of the Foundation may be made by public or private document. However, in the case of fixed property, the transfer must satisfy with the requirements for the transfer of such property.


The Foundation Council is responsible for ensuring that the purposes or objectives of the Foundation charter or in its regulations. Unless the Council is a juridical person, there shall be a minimum of three members of the Foundation Council. There need be but a single Council member if such member is a juridical person.


The Foundation Council is responsible for ensuring that the purposes or objectives of the Foundation are accomplished. Except where the Foundation charter or regulations requires greater or lesser responsibility, the Foundation Council shall have the following general obligations and duties:

1. To administer Foundation assets in a manner consistent with the Foundation charter or its regulations

2. To perform acts, enter contracts and/or consuct lawful business which advances the interests and accomplishes the purposes of the Foundation whithin the law

3. To keep Foundation beneficiaries apprised of the Foundation's economic health

4. To make delivery of Foundation assets to the beneficiaries in the manner articulated in the Foundation charter or regulations, and

5. To carry out all such acts or contracts which are permitted to the Foundation by the present law and by other applicable legal or regulatory provisions.


The Foundation charter or regulations may require that members of the Foundation Council must obtain pevious authorization of a protector, committee or other supervisory entity appointed by the Founder in order to excercise their powers. The members of the Foundation Council shall not bear any liability for damage or loss caused by their decisions, when such decisions have been made with prior authorization.


Except when the Foundation charter or regulations indicate otherwise, the Foundation Council must keep beneficiaries informed of the council's administration.

If the Foundation charter or regulations contain no mention of the frecquency with which this shall be done, the rendering of accounts shall be made annually. When no objection is raised to the accounts within the time specified in the Foundation charter or its regulations, or, if the charter does not regulate the matter, such accounts will be deemed to have been approved ninety days fom the date the accounts were received.

When the accounts have either been approved, or the ninety-day period has elapsed, the Foundation Council shall bear no liability for their administration, unless they had failed to act with the diligence. The above approval does not exonerate the Foundation Council in instances of negligence or fraud in the administration of the Foundation.


The Foundation charter may reserve for the Founder, or other persons, the right to remove or add members of the Foundation Council.


If nothing is articulated in the Foundation charter or regulation regarding the circumstances under which members of the Foundation Council may be removed, the law states that they be removed through a judicial proceedings for the following causes:

1. If council members interests conflict with the interests of the beneficiaries or of theFounder.

2. If council members do not administer the assets of the Foundation with the requisite diligence.

3. If the council member is charged with a crime against private property or public faith, in which case the member shall be suspended for the duration of the trial.

4. If the council members lacks capacity or impossibility to carry out the objectives of the Foundation, from the time such causes arise.

5. For insolvency or bankruptcy proceedings.


The Founder or beneficiaries may remove members of the Foundation Council by judicial proceeding. In an instance in which the beneficiaries are minors, they may act through a legal guardian.

The court judgment decreeing such removal shall also name replacement council members. The new members must be persons with capacity and qualifications for the position. Further, they must have demonstrable moral character to be entrusted with the Foundation assets.


The Foundation charter or regulations may provide for supervisory bodies. The supervisory bodies may be composed of natural or juridical persons, such as auditors or protectors. The Foundation charter or regulations shall establish the powers of the supervisory entities, which may be empowered to:

1. Ensure that the Foundation Council fulfills the Foundation’s purposes, and that it protects the rights and interests of the beneficiaries.

2. Require the Foundation Council to render accounts.

3. Modify the objects and purposes of the Foundation when their fulfillment becomes impossible or too burdensome.

4. Appoint new members of the Foundation Council in circumstances of temporary abscence or expiration of period of services.

5. Add or remove members of the Foundation Council.

6. Approve Foundation Council acts and decision pursuant to the Foundation.

7. Act as custodians of Foundation assets and ensure that they are used in a manner consistent with the objects or purposes contained in the Foundation charter and

8. Add and remove beneficiaries of the Foundation in accordance with the provisions of the Foundation charter or its regulations.


The Foundation shall become dissolved:

1. On the date specified in the Foundation charter.

2. When the purposes or objectives of the Foundation have been fulfilled.

3. Upon insolvency or upon a judicial declaration of bankruptcy.

4. Upon the loss or exhaustion of Foundation assets.

5. Upon revocation and

6. For any reason specified in the Foundation charter or in Foundation law.


A beneficiary may object to Foundation activities that jeopardize his rights or interests by complaint to the protector or supervisory body. Where there is no protector or supervisory body, beneficiaries may initiate judicial action before in a court of appropriate jurisdiction.


The acts of constitution, amendment or extinction of the Foundation are exempt from all taxes, duties ans assessments. Additionally, the following assets are exempt with regard to transfers, transmittal, encumbrance and the income arising therefrom:

1. Asset located abroad.

2. Money deposited by a person, whether natural or juridical.

3. Securities issued by corporations which do not derive income from a Panamanian source, or which are not taxable in the Republic of Panama.

The transfer or fixed property, titles, certificates of deposit, assets, funds, securities or shares which is consistent with the objectives of the Foundation in favor of relatives within the first degree of sanguinity or the spouse of the Founder shall also be exempted from all taxes.


Foundations organized under the laws of other jurisdictions are permitted to relocate to Panama and become subject to the provisions of this law.


Foundations which become subject to Panamanian law shall present a certificate of continuation, which shall contain:

1. The name of the Foundation and its date of constitution.

2. Information pertaining to the registration of the Foundation in its original place of constitution.

3. Declaration of desire to exist in Panama, under its laws and

4. All of the items specified in Article 5 of the law of Panamanian Private Foundations.


The certificate with the resolution of continuation must be accompanied by the following documents:

1. A copy of the Foundation's original constitution any amendment thereto and

2. A power of attorney for the Panamanian lawyer who shall effect the continuation of the Foundation under Panamanian law.

In addition to the two above requirements, the certificate of continuation and attached documents must be duly notarized and filed at the Public Registry.


In the cases provided for in article 28, the responsibilities, duties and rights of the Foundation, which includes involvement in legal actions shall continue in effect. These rights and obligations are not affected by the change of jurisdiction.


Foundations and their assets may be transferred to a foreign jurisdiction, when the laws of such other jurisdiction provide for the transfer of Foundations.

ARTICLE 33 Registrations of Private Foundations must be made at the Public Registry in the "Section of Private Foundations." The Executive Branch of Government, acting through the Ministry of Government and Justice issues the regulations applicable to such section.


Private Foundations are subject to the provisions of executive Decree No. 468 of September 19, 1994 as well as all other legal measures that regulate money laundering and proceeds of drug trafficking.


All members of the Foundation Council, supervisory bodies and public or private employees, with knowledge of Foundation activities, transactions or operations must keep all aspects of the Foundation and its activities strictly confidential. Breaches of this duty shall be punishable by imprisonment of up to six months and a fine of US$50,000.00, without prejudice to the corresponding civil liability.

This article applies without prejudice to information that must be disclosed to authorities in offcial investigations pursuant to relevant law.


In the event that a controversy arises which is not specifically addressed under this law, such controversy shall be resolved by summary proceedings.

The Foundation charter or regulations may stipulate that controversies be resolved by arbitration, and what the rules for such arbitration shall be. If the rules have not been established, the prescribed rules for arbitration contained in the Judicial Code shall apply.


This law shall enter into force after its promulgation. (June 12th, 1995 as per Official Gazette No. 22,804 of June 14th, 1995).

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