PANAMA Trends and Developments Contributed by: Teresa Carballo and Edgar Young, Pacifica Legal
interest. The Foundation Council members (equivalent to a board of directors) will act to fulfil that purpose. Additionally, a foundation can serve as an effective vehicle for asset and liability protection. The project’s assets can be fully separated from the personal assets of founders or developers. Article 11 of the Founda- tion Law provides that the assets of the foundation shall constitute a separate patrimony from the per- sonal assets of the founder. Therefore, they cannot be sequestered, embargoed, or subject to any pre- cautionary action or measures, with some excep- tions. But, in no case shall the assets be affected for personal obligations of the founder or beneficiaries. This protects the foundation’s assets against potential frivolous lawsuits and creditors. This makes the foundation a natural parent or holding entity for a crypto group. Within a typical structure, it can: • act as the architect and orchestrator of a project; • hold the project’s intellectual property and proto- col; • serve for corporate and decentralised governance models; • hold and manage the project’s treasury (eg, DAO Treasury, protocol fees, token reserves, grants); • provide banking access; • own the shares of the operating subsidiaries; and • interact with a DAO, if any. One last, but important, point to mention is that, per Article 3 of the Foundation Law, private-interest foun- dations may not pursue for-profit purposes. Neverthe- less, they may carry out commercial activities on a non-habitual basis, or exercise the rights arising from shares or other equity interests in commercial compa- nies that form part of the foundation’s assets, provided that proceeds go to the purposes of the foundation. Panama corporations : OpCos , front - ends and token SPVs Panama’s other principal vehicle is the corporation, or sociedad anónima . Where the foundation is built for ownership and governance, the corporation is a flexible commercial entity that can take on whatever operational role a project needs. In crypto or Web3
structures, a corporation is most often used for a mul- tiplicity of purposes – eg, as an operating company, as a front-end operator, and as a token issuance vehicle, and a project may use one, two, or all three of them depending on what it actually does. The operating company ( OpCo ) The operating company is the commercial engine of a project. It is the legal entity that does business in the ordinary sense. It can generate and collect revenue, contract with third parties, and handle the day-to-day functions that keep a protocol and its surrounding business running. Because it is a regular corporation, it can invoice, hold accounts, engage staff and con- tractors, and enter into binding agreements like any other company. In practice, an operating company can be used to: • generate and collect fees from a product or pro- tocol – for example, a trading bot, a DEX or swap platform, a perpetuals platform, or a borrowing and lending protocol; • contract with market makers and liquidity provid- ers; • engage curators, risk managers, auditors, and other specialised service providers across the DeFi stack; • run operations, marketing, growth, and business development; and • co-ordinate hosting, infrastructure, analytics, and user support. The front - end operator The front-end operator runs the user-facing layer. This can be a website, extension, mobile or web applica- tion, or an interface through which users can actually interact with the underlying smart contracts. Even when the protocol itself runs autonomously or under decentralised governance, the front end remains the primary point of contact between users and the ecosystem, giving this entity real practical and legal weight. It is usually the named entity in the project’s public-facing legal documents. In smaller projects, the front-end operator and the operating company are often the same corporation; in larger projects, they are sometimes kept separate so that the user-facing
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