The corporation in brief
It is governed by Law 32 of 1927. Its owners are the shareholders, and it is managed by a board of at least three directors, with officers such as the president, secretary and treasurer. It may carry out any lawful commercial activity: run a business, sign contracts, hire staff or own real estate.
The private interest foundation in brief
It is governed by Law 25 of 1995. It has no owners: the founder transfers assets to it, which the foundation manages for the benefit of the persons the founder designates. Its roles are the founder, the foundation council, which manages it, an optional protector, who oversees the council, and the beneficiaries.
It must be set up with initial assets of at least US$10,000. It may not habitually engage in for-profit commercial activities, but it may own shares in companies that run businesses. The beneficiaries may be designated in private regulations, which are not filed with the Public Registry.
Quick comparison
| Corporation | Private interest foundation | |
|---|---|---|
| Purpose | Doing business | Protecting and passing on assets |
| Who owns it | The shareholders | No one; it has beneficiaries |
| Who manages it | The board of directors | The foundation council |
| Habitual commercial activity | Yes | No, except on a non-habitual basis |
| Succession planning | The shares are inherited | Benefits pass according to the regulations, without probate |
| Initial assets | The law sets no minimum | At least US$10,000 |
Shared obligations
- A registered agent, who is always a Panamanian lawyer or law firm.
- Registration of its beneficial owners in the Single Registry of Beneficial Owners (Law 129 of 2020). It is managed by the Superintendency of Non-Financial Entities and is not public.
- Keeping accounting records and their supporting documents (Law 52 of 2016), even if the structure only operates outside Panama.
- Timely payment of the annual franchise tax to the State. If it is not paid, the entity accrues surcharges and may be suspended.
Which one suits you?
- If you are going to run a business, issue invoices or hire staff: a corporation.
- If you want to organize your family assets and decide today who will receive them tomorrow: a private interest foundation.
- If you are looking for both, a common combination is for the foundation to own the shares of the company that runs the business.
Legal basis: Law 32 of 1927 (corporations), Law 25 of 1995 (private interest foundations), Law 52 of 2016 (accounting records) and Law 129 of 2020 (Single Registry of Beneficial Owners).
This publication is for information only and does not constitute legal advice. Translation of the original Spanish version. In case of discrepancy, the Spanish version prevails.