Private Foundations.pdf - Mossack Fonseca & Co.

THE REGULATIONS
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The Foundation Regulations contains: The assets making up the Foundation Assets; the powers of
the Foundation Council; the form of administration; the Beneficiaries of the Foundation; the benefits
corresponding to each Beneficiary; the rules on the distribution of the benefits; the rules on the
rendering of accounts; how the Beneficiaries may be substituted, removed or added; the rules on
remunerations; the appointment of the Protector and his powers; how the Foundation Assets may be
liquidated; and other articles complementing the Regulations.
It is recommended that the client use the model Foundation Regulations prepared by our firm (see
Annex No.3).
We have two (2) models of Standard Foundation Regulations:
1. Irrevocable Foundation Regulations:
Regulations wherein the Founder does not hold powers of any kind and is limited to only creating the
Regulations. These Regulations may also be signed by the Foundation Council.
In the model Irrevocable Foundation Regulations, only the Foundation Council has full administrative
powers and may remove or add Beneficiaries at its discretion, with the authorization of a Protector (if
the client wishes to designate one).
2. Revocable Foundation Regulations:
Regulations wherein the Founder holds full decisory powers.
The Founder and the Foundation Council may remove or add Beneficiaries at their discretion.
The client may also prepare Foundation Regulations in accordance with his needs, for which our staff
of professionals can advise him on the matter.
D. MAIN DIFFERENCES BETWEEN LIECHTENSTEIN
FOUNDATIONS AND PANAMA FOUNDATIONS
It is evident that the jurisdiction of Panama has taken an important step in its development by
introducing the legal figure of a Private Foundation, adopting Liechtenstein’s initial idea to create a
new model that includes the basic requirements of international asset planning.
Thus, the Panama law has added a considerable number of innovations, among which the following
are the most relevant:
In certain circumstances upon the death of the Founder, Liechtenstein Foundations are open to
objections by heirs and creditors, which is limited in Panama because of the rules on the
irrevocability of Foundations in matters of inheritance and the three-year prescription of
revocatory action in matters of creditor fraud.
YA/Pub./10.2007