Panama Private Interest Foundation
Formation and advice under Law 25 of 1995 to organise family assets, designate beneficiaries and set rules of administration that outlive the founder.
What is a Private Interest Foundation?
The Private Interest Foundation is governed in Panama by Law 25 of 1995. One or more persons, individuals or legal entities, create it by contributing assets dedicated to the purposes set out in its foundation charter.
Its defining feature is that it does not pursue profit. That does not prevent it from holding assets or taking part in corporate structures: Law 25 itself contemplates that a foundation may exercise the rights attaching to shares of commercial companies forming part of its assets.
For that reason a foundation is normally used as one component of estate and succession planning, and not as a vehicle for carrying on a business.
What it is used for
The purposes that most often bring clients to the firm are:
- Bringing scattered family assets under a single set of rules: a home, farms, rental property and investments.
- Establishing who will administer the assets and who the beneficiaries will be, on conditions set out in writing.
- Providing for what happens on the founder's death: Law 25 allows a foundation to take effect either from its creation or after the founder dies.
- Keeping the shares of a family business together so that the holding is not fragmented among several heirs.
- Protecting beneficiaries who are minors or who need supervised administration.
What formation requires
- Identification of the founder or founders, whether individuals or legal entities.
- Appointment of the Foundation Council, which is the governing body.
- Definition of the purposes to be stated in the foundation charter.
- Designation of the beneficiaries and the conditions on which they benefit.
- The initial endowment required by law.
- Due diligence documentation and evidence of the lawful source of funds.
- Notarisation of the charter and registration with the Public Registry.
How the firm works
- Review of the assets, the family objectives and the jurisdictions involved before any structure is recommended.
- Drafting of the charter and of the by-laws, which is where beneficiaries and distribution rules are actually defined.
- Formation, notarisation and registration.
- Resident agent services and support with annual obligations and ultimate beneficial owner registration.
Frequently asked questions
Does a Private Interest Foundation automatically protect all assets?
No. A foundation does not make assets untouchable and does not extinguish existing legal liabilities. Estate planning must respect obligations already in force and the specific circumstances of each case. Phrases such as "absolute anonymity", "total protection" or "shielded from any claim" are misleading when used to describe these structures.
Can a foundation own a Panama corporation?
Yes. Law 25 of 1995 expressly contemplates that foundations may exercise the rights attaching to shares of commercial companies forming part of their assets. In many structures the foundation holds the shares while the corporation carries on the business.
What is the difference between a foundation and a corporation?
A foundation serves the purposes stated in its charter and does not pursue profit; it is administered by a Foundation Council and may take effect even after the founder dies. A corporation may be formed for any lawful purpose, carries on business activity and is structured around shares, shareholders, directors and officers. They are not interchangeable.
Do I need a very large estate to justify one?
Not necessarily. It is worth considering when there are several properties, a family business, holdings in different companies, heirs with differing interests, or assets in more than one jurisdiction. What matters is the complexity of the estate and the family's objectives, not its size.
Must the ultimate beneficial owner be registered?
Panama has legislation on the identification and registration of ultimate beneficial owners of legal entities. Any estate structure must be designed within that regulatory framework, and the resident agent is the channel for that obligation.