The recent adoption of Act. No. 25 on Private Foundation under the Panamanian law provides a civil law vehicle as an alternative to the trust which has attracted widespread interest especially among the European community. Making good use of this entity can safeguard your interest and guarantee the benefit from tax avoidance.
The principal aim of this instrument is for asset protection, notably for the purpose of settling the succession of private assets. More sophisticated than a trust but less expensive to operate, it offers high confidentiality and flexibility to the “real” founder who can retain such powers as he wishes while his name as well as the successors (beneficiaries) remains absolutely anonymous.
The private foundation, a juridical institution of Roman-Germanic origin, is a legal entity with the Foundation Charter to be filed at the Public Registry in Panama whilst the By-laws and Regulations are on strictly private basis which can be completely administered abroad without a notice to the Registry or resident agent. Due to its legal capacity, it can open bank accounts all over the world and be used as a holding device to hold shares of different companies or be registered at the Registrar of property in any country. The commercial use of a private foundation is forbidden by law but it can be the owner of commercial companies, and can offer loans to third parties (i.e. offshore corporations belonging to the real owner/beneficiaries).
Private assets under the foundation can be legally distributed to the ultimate beneficiaries after the death of the founder and the formalities prescribed for making a will shall not be required.
A Panama foundation is allowed to emigrate abroad whilst the foreign foundation may immigrate into Panama and continue its existence and legal status subject to the law of the host country.
With the professional support of our affiliated office in Panama, Aall & Zyleman has pleasure to provide in-depth information and guidance for understanding of this modern tools among Asian clients or investors or parties. For further advice and information, please feel free to contact our Hong Kong office.