March 30, 2017 – Executive Order #62

Rules for Non profit Organizations: associations & foundations

This Order was issued by the Ministry of Government (“MinGob“), regulating Non Profit Organizations, such as associations and foundations.
Examples of such Not-for-Profits are:

  • associations
  • private not-for-profit foundations
  • churches
  • religious churches, congregations or communities
  • federations or other entities which are not tied with cooperatives, sports, agriculture or other types which have special legislation.

In simple terms, this Executive Order establishes the basic requirements for registering a Not-For-Profit with MinGob, who is in charge of granting “legal status”, which is later published and made known through the Public Registry of Panama.  Unlike companies, which receive their legal status simply through the filing at the Public Registry, in the case of Non Profit entities, it is MinGob who grants them legal standing.

It is easy to present the papers to MinGob, but you will require the services of a lawyer.  The basic requirements are:

  1. Power of attorney and Application by the lawyer
  2. Articles of Association, establishing the Board of Directors and approval of the Bylaws, signed by the President and Secretary
  3. List of the members of the Board of Directors (at least 3 members) – natural or legal persons.  If you include a legal person, this entity must approve (shareholders or stakeholders) participation in the Board of Directors.
  4. The Bylaws, which should be duly signed by the President & Secretary
  5. Two full sets of copies of the entire set of documents.

The entity must not have private beneficiaries and may in no way dish out income or donations received to members, board members or founders.  It may, however, hire staff.

Bylaws of Non Profit Organizations

The Bylaws of the Not-For-Profit Organization should contain the following:

  • Name – in Spanish or with a translation to Spanish
  • Registered Address in Panama (changes must be notified)
  • Geographic area in which it will operate
  • Detailed objectives – is it philanthropic, union or other nature
  • Initial capital or donations to the entity and money raising actions
  • Will it require quotas?  If so, who sets the quotas?
  • How to become a member, how human rights are upheld, and other basic Constitutional rights
  • Losing membership
  • Rights and duties of members
  • Governing bodies: General Assembly, Board of Directors
  • Who is the legal representative?
  • Changing the bylaws?
  • How the accounts will be registered? Manner in which you will record funds received and spent?
  • Can branches or chapters be set up?  How is this to be done?
  • What is the process for dissolving and liquidating? How will the funds be used on dissolution?

If there are mistakes or errors in the documents handed in, you have 60 days to fix them (once notified), otherwise the request will be denied.

Board Members

Members of the Board  must be residents of Panama: natural or legal persons, Panamanian or immigrants.  Embassy staff, diplomats, and other State or international entity envoys, may also be members.  Global Non Profit bodies may also help establish local Not-For-Profit bodies and appoint resident board members, such as:

  • Chambers of Commerce
  • Philanthropy
  • Culture
  • Religion
  • Education
  • Science
  • Art
  • Sport

Other matters

Order #62 regarding Non Profit Organizations also covers other matters like:

  • Review and Inquests
  • Records
  • Use of funds – prudence and purpose
  • Changes of Bylaws
  • Setting up branches of foreign bodies
  • Dissolving and liquidating
  • Supervision, follow-up and reviews

For more information regarding setting up a Non Profit Organization, please contact Betsy Moran.  She will assist with the registration process, and follow up to get all of the permits, including tax exemption status.

Footnotes:

Executive Order 62 replaces Order 524 (2005), Order 627 (2006) and Order 615 (2012) of the Ministry of Government & Justice, leaving them without effect.

Gray & Co., lawyers, Non Profit Organizations, setting up a not-for-profit

Setting up a Not for Profit Association or Founation