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PRIVATE FOUNDATIONS IN THE BAHAMAS AND PANAMA

A Bahamian or Panamanian Foundation is set into gear when somebody (The Founder) establishes in the Bahamas or Panama a distinct legal entity, say, the ABC Foundation, and makes initial and further contributions to its assets. Any other people and/or organizations (we'll call them third parties) may contribute too. As soon as the contributions are transferred they do not belong to the Founder or the third parties any more and become the Foundation's assets.
The prime goal of the Foundation is to deliver its assets to and distribute them in due time among the Beneficiaries in accordance with the Founder's wishes. The Beneficiaries may be relatives, friends, and loved ones of the Founder, as well as some businesses, educational, religious or philanthropic institutions. The details of the Beneficiaries and the order of distribution of the benefits among them may be specified in Regulations or Articles - a private confidential document.
The Foundation Council (the principal administrative body similar to Directors of a corporation) provides day-to-day management of the assets under the supervision of the Protector. The Protector is "a watchdog" overseeing the proper fulfillment by the Council of all instructions of the Founder. Both Foundation Council members and Protector are appointed by the Founder.

The Foundation Usages

The Bahamian or Panamanian Private Foundation is used most often as a low profile or actually anonymous vehicle:
  • To protect assets from possible future seizure by creditors;
  • To keep assets away from political or economical instability;
  • To optimize tax planning;
  • To provide an alternative inter-vivos ("living") will instrument;
  • To manage pension or profit sharing plans for employees;
  • To hold shares of daughter companies (to be a holding company);
  • To own and transfer freely real and/or personal estate objects, land;
  • To manage bank and brokerage accounts;
  • To invest offshore;
  • To provide continuity of family business, preventing splitting of property;
  • To defend minors and/or disabled persons;
  • To carry out educational, philanthropic, humanitarian, scientific or charitable activities.


Private foundations: a healthy cross between a Trust and an IBC

The Bahamas and Panamanian Foundations took the best from the three worlds: Liechtenstein Foundations, Common Law trusts, and International Business Companies.

The inherent features of a Foundation Features derived from.
Common Law trusts International Business Companies
The Founder(s) and Beneficiaries are not answerable for liabilities of the Foundation and vice versa The Founder's or any third party's assets transferred to a Private Foundation become the property of the Foundation and henceforth are separated from his/her assets Anonymity to the Beneficiaries: their names are not filed in public records
Bahamas foundation: the assets effetively transferred to a foundation shall be the property of that foundation. Panamanian foundation: The creditors may claim the Founder's or any third party's endowments and/or gifts only within 3 years after their transfer to the Foundation's assets. None of them recognizes forced heirship. The Founder is akin to a trust Settlor as he alienates his property in favour of the Foundation Tax exempt on world wide income outside of Bahamas/Panama, a fixed Franchise Tax of US$500/US$300 and Registered Office Fees must be paid annually instead. Bahamian foundations are obliged to have a resident secretary as well.
May function as a legal substitute for a will superseding the inheritance laws (i.e. forced heirship) of the Founder's jurisdiction; it may come into force in case of death of the Founder The Foundation Council is similar to Trustee as it administers the assets assigned to the Foundation by the Founder and third parties It is a distinct legal entity registered with the Public Registry
No shares and Share Certificates are issued The Protector, who oversees the Foundation Council is envisaged in both Private Foundation and Trust structure The Foundation Council may meet anywhere in the world
There are no owners of a Foundation's assets except for the Foundation itself Can be revocable: i.e. the assets may be returned to the Founder, and irrevocable (similarly, there are revocable and irrevocable trusts) Audit and/or filing of tax returns or financial statements is not required
The duty of the Founder is to transfer the initial endowment of not less than $10,000 The Founder may be a member of the Foundation Council and a Beneficiary. In a trust the Settlor may be the Trustee or a Beneficiary Simple day-to-day administration scheme: Foundation Council is similar to the Directors' Board of an IBC
May be used for family, charitable, scientific, religious or other non-profit purposes A Beneficiary of the Foundation may bring suit if the duty of the Foundation Council is breached (the same way Beneficiaries of a Trust may suit the Trustee) Possible using of Nominees, inclusive of the Nominal Founder
Any third parties may as well make contributions to the Foundation assets There is a separate confidential document - ARTICLES in case of Bahamian foundations or REGULATIONS for Panamanian foundations stipulating the names and details of the Beneficiaries and all procedures of delivery and distribution of benefits. A Letter of wishes in a Trust has some similar functions. Must have a Registered Agent in the jurisdiction of incorporation
Panamanian foundations cannot undertake commercial activities on a regular basis. Nevertheless, they may engage in commercial activities from time to time, when the profits are used for the objectives of the foundation. The Protector can remove the Foundation Council and appoint another members (in a Trust the Protector often has the same right in relation to the Trustee) Bahamian foundations can be engaged in commercial activities.Both Bahamian and Panamanian foundations can hold shares of daughter companies or subsidiaries and receive dividends
The assets of the Foundation cannot be used to satisfy the obligations of the Founder or of beneficiaries (e.g. lawsuits, divorce) May keep and manage checking, securities, trading, merchant, savings, deposit, investment, and other types of accounts with any financial institution of the world

You may kindly place a relevant order and find some extra information about Bahamian Private Foundations in OFFSHORE FINANCIAL CENTERS-BAHAMAS and about Panamanian foundations in OFFSHORE FINANCIAL CENTERS-PANAMA. The detailed description of our fees and services regarding a Private Foundation establishment and its further support is listed in OUR SERVICES-PRIVATE FOUNDATION.


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