The Panama Foundation

panama foundation

The legislation allows for the set-up of one type of foundation: the Panama Private Foundation. 

in the last decade, many countries approved foundation laws aiming at capturing a piece of that market, but the Panama Foundation approved in 1995 has been the most successful of all the jurisdictions approving foundation laws.

Private Foundation

Set up for the benefit of a named person or class of persons called beneficiaries. The foundation’s patrimony is owned by the foundation itself (due to its separate legal personality) and is administered by designated persons (known as ‘administrators’) for the benefit of such beneficiaries.

Separate Legal Identity

Unlike trusts, foundations have a legal personality and the foundation itself becomes the legal owner of the foundation property. Based on Panamanian company law principles and Liechtenstein law provisions, Panamanian foundations require the appointment of administrators who are responsible for the administration of the foundation’s property. The public deed creating a foundation must be registered. However, only a minimum of information is available to the public and confidentiality is retained.

Key Features of a Panama Foundation

Means of Establishment: A Panama foundation can only be constituted in writing, either by a public deed published by a Notary, or by a will. The foundation deed must be registered with the Public Registry of Panama.

Assets: The assets of a foundation may originate from any lawful business or activity and may consist of present or future assets of any nature.

Foundation deed: The foundation deed must contain the following information:

    • The name of the foundation, which must include in it the word ‘foundation’
    • The registered address in Panama
    • The purposes or objects of the foundations
    • The constitutive assets with which the foundation is formed
    • The composition of the board of administrators, and if not yet appointed, the method of their appointment
    • The legal representation (a local law firm representative is necessary)
    • The term for which it is established
    • In the case of a private foundation, the deed of foundation must contain a declaration that the foundation is constituted for the benefit of the beneficiaries. In the latter case, the beneficiaries must be indicated in a separate private legal instrument, known as a Letter of Wishes or Regulations which must be signed by the founder, addressed to the administrators. In order to protect confidentiality, the beneficiary statement does not need to be filed.

Legal Form: Once the Panama foundation is established, the deed is published, and the foundation is registered with the Public Registry of Panama, a new legal person is created and the foundation itself becomes the owner of the foundation property.

Termination: Except when foundations are used as collective investment vehicles, in securitization transactions or in the case of purpose foundations (which may be established for an unlimited term), foundations are valid for an unlimited period.

Founder: The rights of the founder:

    • The founder may exercise supervision over administration of the foundation, obtain a copy or copies of accounts, inventory and descriptive notes of property
    • He/she may intervene in court proceedings concerning the appointment of administrators or the disposal of assets Conditions for the founder
    • The founder may also be an administrator
    • The founder may be a beneficiary during his lifetime.


Duties of the administrator:

    • The administrators (whether natural or legal persons) are responsible for maintaining possession and control of the property of the foundation, safeguarding such property and ensuring compliance with the statute of the foundation and the law
    • They are bound by fiduciary obligations stipulated in the Foundations Law. Any fiduciary who breaches such obligations shall be bound to return any property, together with granted benefits derived by him, whether directly or indirectly, to the person to whom the duty is owed.

Conditions for the administrator:

    • The administrator can be based outside Panama. However, a person resident in Panama must be appointed to act as the local legal representative of the foundation in any case;
    • The administrator may be the founder.

Supervisory Protector: The deed can provide for a supervisory council or the office of protector. They usually exercise supervision over the acts of the administrators, and may be vested with powers of appointment or removal of administrators.

The BusinessPanama Group provides a convenient One Stop Shop offering you the following services: 

    • Incorporation of companies, trusts and foundations
    • Fiduciary management and administration of companies, trusts and foundations
    • Banking & trading accounts
    • Setting up of investment funds, partnerships, LLCs
    • Immigration & residence
    • Family office
    • Wealth management services

For more information, please contact us.