Private funds in Panama: what is important to know

Panama is a transcontinental state. The economy is based on the use of the Panama Canal and tourism. The most developed industrial sectors are oil refining and construction. The registration of a private fund in Panama is advantageous, given that the conditions are relatively attractive and there are many advantages of opening.

The concept of private fund

A private fund is a legal entity, established by its founders that manages assets transferred to the fund for the benefit of its beneficiaries.

The main objectives for opening a private fund in Panama in 2020 are the following:

• Preservation and management of assets;
• Ensuring property interests;
• Use of the fund as an instrument of ownership;
• Ensuring confidentiality.

The fund must be registered in the country where it is established. The peculiarity of funds is that the founder, when transferring assets, ceases to be their owner. Management is performed by the fund's board. Board members must be approved by the founder. Beneficiaries are not owners of transferred assets. Information about the latter is contained in internal documentation and is not publicly available.

If funds are registered in offshore jurisdictions, taxation is minimal or absent. Please contact our specialists at IT-OFFSHORE to learn more about the features of fund opening.

The advantages of opening a fund in Panama

One reliable way to protect assets is to establish a private fund in Panama. It can be founded by family members, legal entities or a group of individuals.

The pros of creating:

• The inability to identify the owner of the assets;
• The anonymity of the owner of the assets;
• The possibility of redistribution of assets.

Unlike with corporations, opening a fund does not imply commercial activity. Commercialization of the fund is based on the fact that it is possible to make profit by participating in investment activities, performing operations with banks, etc.

Stages of opening

The Fund can be opened independently or through individuals or legal entities. Registration involves the pooling of capital for various purposes, which are set out in the Act of Establishment and the regulations.

When a fund is established, a corresponding act must be signed and registered in the Register. The Act must specify the name of the fund, the amount of capital and the purpose of its establishment.

The Council should be comprised of at least 3 members. A private fund ceases to exist due to liquidation, loss of property, insolvency, after achieving its objectives, due to expiration of the term of establishment, or due to other pre-established grounds.