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.

Follow the link below to the next part of the Panama Foundation Law 25 Articles 1-37, for the continuation....