PANAMA

2. Trusts

A. Introduction

Panama introduced the trust into its legislation with its Spanish name 'fideicomiso', through Law No. 9 of 1925, influenced by the Kemmerer mission, which had visited several Latin American countries trying to expand the trusts concept as part of its economic and financial policy advice. Law No. 9 of 1925 was replaced by Law No. 17 of 1941, which in turn was replaced by Law No. 1 of 1984, which together with subsequent regulations and amendments is still in force.

Panamanian trust law is one of the most flexible in Latin America. Panamanian trusts are frequently used to create collateral trust arrangements to hold a wide variety of assets, including real estate and chattel, stocks and accounts for the benefit of lenders and creditors in connection with secured loans and note offers. Other common uses of Panamanian trusts include voting trust agreements, retirement and pension funds, estate investment funds and estate planning.

Trusts are established in Panama by execution of a trust agreement between the settlor and trustee. There is no need to file the trust agreement in Panama unless the trust owns real property located in Panama. It is not necessary that the settlor, trustee or beneficiaries be nationals or residents of Panama. However, the trust must have an agent in Panama, who must be a lawyer or a law firm, and who is required to approve and sign the trust instrument.

For a trust company to engage in the trust business in Panama, it must obtain prior authorisation from the Superintendence of Banks, which then issues a trust licence once all regulatory requirements have been met.

B. Resources

Superintendence of Banks of Republic of Panama: www.superbancos.gob.pa

Trusts & Trustees: www.trusts-and-trustees.com


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