Arrocha & Co.

Article 3.
The foundations of private interest will not be able to persecute of profit. However, they will be able to carry out mercantile activities in form no habitual, or to exert the rights originating of the representative titles of the capital of mercantile societies that integrate the patrimony of the foundation, whenever the result or economic product of such activities it is dedicated exclusively to the foundation.

Article 4.

The foundations of private interest will be able to be constituted so that have his desired effects, from the moment of its creation or after the death of his founder, by no body of the following methods:
1. By means of private document subscribed by the founder, whose company/signature will have to be authenticated by public Notary of the place of its constitution.2. Directly before the public Notary of the place of his constitution.  Whichever it is the method of the constitution, will have to be fulfilled the formalities that for the creation of the foundations they settle down in the present
Law.  In case that the foundation is created, or by document deprived public or, stops that he has desired effect after the death of the founder, Not they will require the formalities anticipated for the Proof aments granting.

Article 5.

The original act must contain:

1. The name of the foundation, expressed in any language with characters of Latin alphabet, the one that will Not be equal or similar to the one of another preexisting foundation in the  Republic of Panama, to object of which it is not lent to confusion; the name will have to include the word “foundation” to distinguish it of others natural or legal people of another nature.

2. El initial patrimony of the foundation, expressed in nobody currency of legal course, that in no case he will be inferior to a sum equivalent to ten thousand dollars ($10, 000,00).
3.  The designation, in complete and clear form, including direction of the member of the members of the Council of Foundation, to which it will be able to belong founder.
4.  Address of the foundation.
5.  The name and address of the resident agent of the foundation in the Republic of Panama, that will have to be lawyer, or a company/signature of lawyers, who it will have to authenticate the original act, before its inscription in the Registry Public.
6.  The aims of the foundation.
7.  The form to designate to the beneficiaries of the foundation between which canto include itself to the founder.
8.  The reserve of the right to modify the original act when it is considered advisable.
9.  The duration of the foundation.
10. The destiny that will occur to the goods of the foundation and it forms of the liquidation of its patrimony, in case of dissolution.
11.  Any other allowed clause that the founder considers advisable.

Article 6.

The original act, just as any modification that it does to this one, will have to him to write up itself in any language with characters of the Latin alphabet and to fulfill norms of inscription of acts and titles in the Public Registry, for which there is to be previously protocolized in a Notary’s office of the Republic. If original act or his modifications will not be written up in Spanish language, they will have to be protocolized, along with its translation, by an authorized public interpreter of the Republic of Panama.

Article 7.

The modifications to the original act, when are allowed, they have to take place and to sign itself in agreement with which in her one settles down. respective agreement, resolution or modification act, will have to contain the date in that was made, the name clearly identifiable of the person or the people who subscribe it and the companies, that will have to be authenticated by public Notary of the place where it is signed document.

Article 8.
All foundation of private interest will have to pay straight registry and one
appraises only annual equivalent to which they settle down for the joint
stock companies in Articles 318 and318ª of the Fiscal Code. The procedure and the mode of payment, consequences by the lack of payment and all the others complementary dispositions of the legal rules before mentioned, will be applied to them to interest foundations prevailed.

Article 9.
The inscription of the original acts in the Public Registry it will grant to the foundation legal personality with no need of any other authorization legal or administrative.  The inscription in the Public Registry constitutes, in addition, means of publicity in front a third. Consequently, the foundation will be able to acquire and to have goods of all class, to contract obligations and to be part in administrative processes and judicial of all order, in accordance with which they establish the dispositions that are applicable.

Article 10.
Once the foundation has acquired legal personality, founder or third that they have committed themselves to contribute goods to the foundation, in case same, or at the request of any person with interest in the foundation, of the goods that they were committed. When the foundation is constituted to have the desired effects from death of the founder, will be considered that it has existed with anteriority to its death, with respect to donations that this one has done to the foundation.

Article 11.
For all the legal effects, the goods of the foundation they will constitute a patrimony separated of the personal goods of the founder. Therefore, no they could be kidnapped, obstructed nor object of action or measurement to prevent, except by incurred obligations, or by prejudices caused with occasion of the execution of aims u objectives of foundation, or by legitimate rights of its beneficiaries. In no case will respond by personal obligations of the founder or the beneficiaries.

Article 12.
The foundations will be irrevocable, safe in the following ones cases:
1.   When the original act has not been registered in Public registry.
2.   When the opposite in the act settles down itself specifically original.
3.   By anyone of the causal ones of revocation of donations. 

Article 13.
In addition to the position in the previous article, when foundation has been created stops that it has desired effects after the death of the founder, this one will have, in excluding form, the right to revoke it.  The heirs of the founder will Not have right to revoke creation or transferences, even in case the foundation has Not been registered in the Registry Public before the death of the founder.

Article 14.
The existence of legal dispositions in hereditary matter in the address of the founder of the beneficiaries, he will not be opposable to the foundation, nor it will affect his validity nor will it prevent the accomplishment of its objectives, in the form anticipated in the original act or his regulations.

Article 15.
They will have right to oppose the contributions or the transferences of goods in favor of one foundation, the creditors of the founder, or third, when transference constitutes act of fraud of creditors. The rights and actions of sayings creditors they will prescribe to the three (3) years, counted from the contribution or the transference of goods to the foundation.

Article 16.
The patrimony of the foundation can be originated in nobody allowed legal business and it could be constituted on goods of any nature, presents or futures.  Also they will be able to be gotten up to the patrimony extreme periodic of money or other good son the part of the founder or of third. The transference of goods to the patrimony of foundation can be made by public or deprived document, if one will treat of real estate, the transference will adjust to the norms on transmission of real estate.

Article 17.
The foundation must have an Advice of Foundation, whose attributions o responsibilities will be established in an original act or in its regulations. Unless she was a legal person, the number of members of Advice of Foundation he will Not be smaller of three (3).

Article 18.
The Council of Foundation will have to his position the fulfillment of objective aims or of the foundation. Unless another is expressed signaling in the original act or his regulations, the Council of Foundation will have the following obligations:
1.   To administer the goods of the foundation, in agreement with the original act or his regulations. to
2.  Celebrate legal acts, contracts or businesses that are advisable or necessary to fulfill the object of the foundation, and to include in the contracts, agreements and other instruments or obligations, clauses and conditions necessary and advisable, that adjusts to the aims of the foundation and that no opposite to the Law, the moral, moral convention or to the public order.
3.   To inform to the beneficiaries of the foundation of the situation patrimonial of this one, according to it establishes the original act or its regulations.
4.   To give to the beneficiaries of the foundation the goods or resources that to his favor there are established the original act or its regulations. To make the acts or contracts that this Law and others legal dispositions or prescribed that is to him applicable, they allow the foundation.

Article 19.

The original act or its regulations will be able to arrange that members of the Council of Foundation only can exert his faculties with the previous authorization of a protector, committee or any other organ of control, designated by the founder or by most of the founders. The members of the Council of Foundation will not be responsible by the loss or deterioration of goods of the foundation, nor by the caused prejudices or prejudices, when the mentioned authorization has been properly obtained.

Article 20.

Unless another thing in the original act or his is arranged regulations, original advice will have to render accounts of his management to beneficiaries and, in his case, to the control organ. If the original act or in his regulations nothing they will establish on the individual, the surrender of accounts will have to be made annually. If the presented account will not be objected within the term anticipated in the original act or his regulations, in his defect, it will be considered that it has been approved, within ninety (90) days, counted as of the day in which it was received, for which it will be certainty of this term in the report of surrender of accounts. Passed this period or approved the account, the members of Advice of Foundation will be exonerated of responsibility by their management, unless not they had acted with the diligence of good family man. So the approval not emit in front of exonerates the beneficiaries or third who have interest in the foundation, by prejudices caused by serious fault in the administration of foundation.

Article 21.
In the original act, the founder will be able to reserve itself, or for others, the right to remove the members of the Council of Foundation, the same as add new members.

Article 22.

When the original act or the regulations not established on the right and causes of removal of the members of the Council of Foundation, these they could be removed judicially, by means of the process s of the summary process, by the following ones causes:
1.   When their interests were incompatible with the interests of the beneficiaries or of the founder.
2.   If they will administer the goods of the foundation without the diligence of a good father of family.
3.   If the property or the faith will be condemned by crime against public. In this case, while the penal process is transacted, it will be possible to be decreed temporary suspension of processed member.
4.   By incapacity or impossibility to execute the objectives of the foundation, from that such causal ones are formed.
5.   By insolvency, bankruptcy or aid.

Article 23.

They can request the judicial removal of the members of the Council of Foundation, founder and the beneficiary or the beneficiaries. If beneficiaries were incapacitated or minor, these could be represented by those who exert on them mother country power or trusteeship, in its case.  Sentence of the court who decrees the removal will have to designate new members in replacement of the previous ones, who will have to be people with sufficient capacity, suitability, and recognized moral solution to administer the goods of the foundation, of agreement with the aims established by the founder.

Article 24.
The original act or its regulations will be able to anticipate the constitution
of organ of control, that could be constituted by natural people or legal, such as auditors, protectors of the foundation or other similar.  The attributions of the control agency will settle down in the original act or in its regulations and they will be able to include, among others, the following ones: of the foundation are fulfilled on the part of Advice of Foundation and by the rights and interests of the beneficiaries.
2.   To demand surrender of accounts to the Council of Foundation.
3.   To modify the aims and objectives of the foundation, when these they were from impossible or onerous accomplishment.
4.   To designate new members in the Council of Foundation by absence weather, definitive or extinction of the period of some of them.
5.   To name new members of the Council of Foundation in cases of temporary absence or accidental of some of them.
6.   To increase the number of members of the Council of the Foundation.
7.   To authenticate the acts adopted by the Council of the Foundation indicated in the original act or in its regulations.
8.   To guard the goods of the foundation and to try that his is fulfilled application to uses or purposes enunciated in the original act.

9.   To exclude beneficiaries of the foundation and to add others in agreement it arranges the act to it original or its regulations.

Article 25.
The foundation will dissolve by:
1.   The arrival of the indicated day in that one is due to finish foundation in agreement with original act.
2.   The fulfillment of the aims for which it was constituted or to become impossible its accomplishment.
3.   To be in state of insolvency, cessation of payments or to have declared judicially the aid of creditors.
4.   The loss or total extinction of the goods of the foundation.
5.   Its revocation.
6.   Any other cause established in the original act or in the present Law.

Article 26.
All beneficiary of the foundation will be able to oppose the acts of foundation that injures to the rights that this one confers to him, denouncing this circumstance to the protector or other agency of control if there will be them, or in its defect, promoting directly the corresponding judicial claim, before competent court of the address of the foundation.

Article 27.
They will be extents of all tax, contribution, rate, charge or tribute of nobody class or denomination, the acts of constitution, modification or charge of the goods of the foundation and the originating rent of these goods or  any other act on them, whenever such goods constitute:
1.   Located goods abroad.
2.   Money deposited by natural or legal people whose rent is Not of source Panamanian or when their rent is not taxable by any cause, even though such actions or values are deposited in the Republic of Panama .Also they will be extents of all tax, the acts of transference of goods buildings, titles, certificates of deposit, values, money or battles conducted by reason of the fulfillment of the objective aims or by extinction of the foundation, in favor of the relatives within first degree of consanguinity and the spouse of the founder.

Article 28.
The foundations constituted in accordance with a Law foreigner, will be able to take refuge in the dispositions of this Law.

Article 29.
The foundations to which the previous article talks about, that choose to take refuge in the dispositions of this Law, will present a personal identification document continuation, issued by the agency that with adjustment to its internal regime corresponds to them, which will have to contain:
1.   The name of the foundation and the date of its constitution.
2.   The data of its inscription or registry deposit in its country of origin.
3.   The express declaration of its desire to continue its existence legal as a one Panamanian foundation.
4.   The requirements that the constitution of foundations stops of private interest stipulates Article 5 of the Law.

Article 30.
To the content certification of the resolution of continuation and the other requirements mentioned in the previous article, they will have to be enclosed following documents:
1.   The copy of the original act of constitution of the foundation that
declares his desire of to continue in Panama, along with any later modification. 

2.  The power granted to a Panamanian lawyer so that it carries out the process s stop to make the continuation effective of the foundation in Panama. 
The certification of continuation, as well as the documents associates to that one becomes reference this Law; will have to be properly protocolized e registered in the Registry Public, so that the foundation continues its legal existence as a foundation of deprived interest of the Republic of Panama.

Article 31.
In the cases anticipated in article 26, the responsibilities, duties and rights of foundation, acquired prior to the change of address or of the legislation, they will continue effective, as well as the processes that will be had restored in his against, or those that the foundation will have promoted, without they are affected such rights and obligations with the authorized change by the mentioned ones legal dispositions.

Article 32.
The foundations constituted in accordance with the present Law, as well as the goods that they integrate his patrimony, they will be able to be transferred or to be put under laws and jurisdictions another country, according to it has the original act or their regulations.

Article 33.
The inscriptions related to the interest foundations prevailed they will take place in the Public Registry, in the special section that will be denominated “Section of Foundations of Private Interest”. The Executive agency, by conduit of Ministry of Government and Justice, will send the regulation applicable to this section.

Article 34.
In order to avoid the illegal use of the foundations of private interest they will be applied, for his operation, all the contained legal dispositions in Executive decree No 468 of 1994 and any other effective norm designated to fight money laundering coming from the drug trafficking.

Article 35.
The members of the Council of Foundation and the agency of control, if there is, as well as the public or private entity have any knowledge of activities, transactions or operations of the foundations; they will have to maintain discretion and confidentiality on the matter, at any moment. Infractions to this violation will be sanctioned with prison of six (6) months and a fine of  FIFTY THOUSAND DOLLARS (USD$50,000.00), without prejudice of the civil responsibility. This article will be applied without prejudice of information that must reveal to the official authorities and inspection that these must carry out in the way is established by the law.

Article 36.

All controversy that it does not have indicated in this law special procedure will be resolved by the process s of the summary judgment. It will be established in the original act or in the regulations of the foundation, that any controversy that arises on the foundation will be solved by referees, as well as the procedure they should follow. In any case that the procedure has not been established, they will apply the norms that are contained on the Judicial.

Article 37. This law will begin to prevail from its promulgation.