PANAMA FOUNDATION LAW No. 25, June 12, 1995
"Whereby Private Foundations Are Regulated"
PART 3 of 4
THE LEGISLATIVE ASSEMBLY DECREES:
Article 20.
Unless otherwise provided for in the foundation charter
or its regulations, the Foundation Council must render
an accounting of its activities to the beneficiaries
and, when applicable, to the supervisory body. If the
foundation charter or its regulations stipulate nothing
in this regards, the rendering of accounts must be done
annually. If the accounts 90 rendered are not objected
within the term established in the foundation charter
or its regulations, in lack of it, it shall be deemed
as having been approved within ninety (90) days from
the day it was received, for which purpose, record of
this term shall be made in the report rendering the
accounts.
Such period having lapsed or the account approved, the
members of the Foundation Council shall be exempted
from liability for their administration, unless they
had failed to act with the diligence of a bonus paterfamilias.
Such approval does not exonerate them before the beneficiaries
or third parties having an interest in the foundation,
for damages caused due to gross negligence or fraud
in the administration of the foundation.
Article 21.
In the foundation charter the founder may reserve for
himself/herself or for other persons, the right to remove
the members of the foundation Council, as well as to
appoint or add new members.
Article 22.
When the foundation charter or its regulations do not
establish anything in respect to the right to and the
causes for removal of the members of the Foundation
Council, these may be judicially removed, through summary
proceedings, for the following causes:
1. When their interests are incompatible with the interests
of the beneficiaries or the founder.
2. If the administration of the assets of the foundation
lacked the diligence of a bonus paterfamilias.
3. If they are convicted for a crime against private
property or public faith. In this case, while the criminal
proceedings are in progress, the temporary suspension
of the member on trial may be decreed.
4. For incapacity or impossibility to carry out the
objectives of the foundation, from the time such causes
may arise.
5. For insolvency or bankruptcy proceedings.
Article 23.
The founder and beneficiary or beneficiaries may request
the judicial removal of the members of the Foundation
Council. Should the beneficiaries be disabled or under
age they may be represented by whoever exercise upon
them the "patria potestas" or guardianship,
as the case may be.
The judgement of the court decreeing the removal, shall
appoint new members in replacement of the previous ones,
who shall be persons with sufficient capacity, competence
and good moral standing to administer the assets of
the foundation, in accordance with the purposes established
by the founder.
Article 24.
The foundation charter or its regulations may provide
for the constitution of supervisory bodies, that may
be constituted by natural or juridical persons, such
as auditors, protectors of the foundation or others.
The duties of the supervisory bodies shall be established
in the foundation charter or its regulations and may
include, among others, the following:
1. To ensure the fulfilment of the purposes of the foundation
by the Foundation Council and (to protect) the rights
and interests of the beneficiaries;
2. To demand from the Foundation Council, the rendering
of accounts;
3. To modify the purposes and objectives of the foundation,
if and when they become too costly or impossible to
fulfil.
4. To appoint new members of the Foundation Council
due to temporary or permanent absence or for expiration
of the period of anyone of them.
5. To appoint new members of the Foundation Council
in cases of temporary or accidental absence of anyone
of them.
6. To increase the number of members of the Foundation
Council.
7. To approve the acts adopted by the Foundation Council,
as indicated in the foundation charter or its regulations.
8. To guard the assets of the foundation and observe
their application to the uses or purposes stated in
the foundation charter.
9. To exclude beneficiaries of the foundation and to
add others in accordance with the provisions of the
foundation charter or its regulations.
Article 25.
The foundation shall be dissolved due to:
1. Reaching the day in which the foundation must terminate,
in accordance with the foundation charter.
2. The fulfilment of the purposes for which it was constituted
or if their fulfilment becomes impossible.
3. Being in a state of insolvency, cessation of payments
or due to bankruptcy proceedings having been declared
judicially.
4. The loss or total extinction of the assets of the
foundation.
5. Its revocation.
6. Any other cause established in the foundation charter
or in the present Law.
Article 26.
Every beneficiary of the foundation may contest any
acts of the foundation that may damage the rights conferred
upon him/her, denouncing such circumstance to the protector
or to other supervisory bodies, if any; or lacking them,
directly promoting the respective judicial claim, before
a competent court of the domicile of the foundation.
Article 27.
The acts of constitution, amendment or extinction of
the foundation, as well as the acts of transfer, transmittal
or encumbrance of the assets of the foundation and the
income derived from such assets or any other act in
connection therewith, shall be exempt from all taxes,
contributions, duties, liens or assessments of any kind
or denomination, provided that such assets are:
1. Assets located abroad.
2. Money deposited by natural or juridical persons whose
income is not derived from Panamanian sources nor taxable
in Panama for any reason whatsoever.
3. Shares or securities of any kind, issued by corporations
which income is not derived from Panamanian sources
or when such income is not taxable for any reason whatsoever,
even when such shares or securities be deposited in
the Republic of Panama.
The acts of transfer of real estate, titles, certificates
of deposit, securities, money or shares, carried out
in fulfilment of the purposes or objectives, or for
the extinction of the foundation, in favour of relatives
within the first grade of consanguinity and of the spouse
of the founder, shall also be exempted from all taxes.
Article 28.
Foundations constituted in accordance with a foreign
law may become subject to the provisions of this law.
Article 29.
Foundations referred to in the previous article that
opt to become subject to the provisions of this Law,
shall present a Certificate of Continuation, issued
by such bodies as their internal regime may call for,
and which shall contain:
1. The name of the foundation and the date of its constitution.
2. Data about its registration or deposit (of the charter)
at its country of origin.
3. An express declaration of its desire to continue
its legal existence as a Panamanian foundation.
4. Requirements stipulated under Article 5 of this Law,
for the constitution of private foundations.
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Panama Foundation Law 25 Articles 1-37, for the continuation....
