Cook Islands

The Cook Islands is widely recognized as the leading asset protection jurisdiction for international trust structures.

An independent country consisting of 15 islands in the heart of the South Pacific Ocean, almost directly south of Hawaii.

Local currency is the New Zealand dollar.

Enjoys an international reputation as the premier jurisdiction for international trusts because of its balanced protective laws.

There are three main pieces of legislation in the Cook Islands dealing with international offshore companies and services:

• International Companies Act 1981-82• International Trusts Act 1984• Limited Liability Company Act 2008

The general laws of the Cook Islands do not apply to limited liability companies, international companies, or international trusts established in the Cook Islands; they are governed by their own distinct laws enacted by Parliament and they are regulated by the Financial Supervisory Commission of the Cook Islands.

Political system is based on the English Westminster model with a Parliament, comprising 24 members led by the Prime Minister.

Commonwealth nation with the Queen of England, Her Majesty Queen Elizabeth II, as the symbolic Head of State.

Advantages of Establishing an International Trust or Incorporating a LLC or IBC in the

Cook Islands.

The international company formation products offer some of the best advantages for asset protection and tax planning making it one of the most sought-after jurisdictions in the world.

Ease of operation, setup and control.

Maximum confidentiality, as incorporation documents do not name or identify the shareholder(s) or director(s).

Corporate shareholders and directors are allowed.

No disclosure or minimum capital requirements.

Foreign judgments are not recognised in the Cook Islands.

Stable economic environment and political system.

Southpac Trust’s offices are located in the heart of the main township of Avarua on the island of

Rarotonga. With its tropical climate, legislative platform, and Southpac Trust’s professional service,

the Cook Islands is a paradise you can trust.

Cook Islands

Where the Trust is Deemed to be Created

The Cook Islands International Trust Act (the ‘ITA’) provides that a trust may be executed in various places at various times by the relevant parties. In cases where the settlor, protector and trustee are not in the same place at the same time when executing the trust, it is deemed that the trust was executed by all parties in the Cook Islands at the same time as it was executed by the settlor.

Authority of Multiple Trustees to Act

The ITA provides that in cases where there are multiple trustees they may act by majority decision.

Cook Islands International Trust

Trustees Power to Delegate Duties

The ITA gives the trustees wide powers of delegation. Specifically, subject to the terms of the trust deed, under the ITA a trustee may employ professional or skilled persons as investment managers or to act in relation to any of the affairs of the trust to hold any or all of the property of the trust.

Range of Investment Possibilities

Subject to the provisions of the trust deed the trustee may invest in any manner of investment and has the same investment powers as any natural person.

Duration of Trusts

There is no rule against perpetual trusts, and a trust may be indefinite.

Holding of Title

A trust instrument may provide that property need not be in the name of all the trustees. Where said trust property is not in the name of all trustees, it shall none the less be treated as if it had been transferred to all of the trustees.

Custodial Trustee

The ITA provides for the appointment of a “custodian trustee” wherein said trustee holds, but does not manage, property. Management of the property will be the responsibility of a “managing trustee.”

Advisor to Trustees

A trust instrument may provide for any person or persons to be appointed to advise the trustees in respect of some or all matters relating to the property of the trust.

Structure

Member(s)

• Any individual or entity from any country can hold a membership interest in an LLC.

• Single-member LLCs are permitted.

Manager

• Management of the LLC may be by its member; or by a manager appointed by its member.

• The manager can have total (100%) control of the company.

• The manager need not have any ownership interest, notwithstanding he can control the company and all of its assets.

Operating Agreement

The operating agreement allows for any provisions, rules and terms for the conduct of the LLC’s business as long as they are lawful.

Confidentiality

Member and manager information is only known to the registered agent which registers the LLC. An LLC is required

to keep accounting records that are sufficient to show the position of the LLC’s transactions with reasonable accuracy; these records must be retained by the resident agent within the Cook Islands.

Foreign Judgements

Foreign judgements given in relation to the availability of a membership interest to satisfy a creditor (unless consistent with Cook Islands law), cannot be recognised or enforced by a Cook Islands court.

The sole remedy available to a creditor in respect of a member’s membership interest is a charging order.

The person in whose favour a charging order has been issued cannot:

• Interfere in the manager’s management of the LLC including any sale of its assets.

• Liquidate or seize the assets of the LLC.

• Restrict the business of the LLC.

• Dissolve or cause the dissolution of the LLC.

Cook Islands Limited Liability Company (LLC)

As the demand for flexible offshore company structures became apparent within the offshore market, the Cook Islands Limited Liability Companies Act 2008 was passed.

Formation of LLC Time Frame

Within 24 hours of receiving executed scanned copies of properly completed company and due diligence documents.

Office

The registered office must be the principal office of a trustee company in the Cook Islands.

Confidentiality

IBCs are required to keep accounting records of the company to enable it to show the position of the company with reasonable accuracy; these records are kept at the registered office and are not available for public scrutiny.

Inspection and search of registers is restricted to company officers, members and others with the written consent of a director or the Registrar.

Formation of IBC Time Frame

Within 24 hours of receiving executed scanned copies of properly completed company and due diligence documents.

Structure

Shareholders

• Only one shareholder is needed to form an IBC.

• Shares may be issued to individuals or companies from any country. There are no minimum capital requirements and shares may hold no par value.

Directors

• An IBC needs only one director, who need not be a resident.

Secretary

• A resident secretary is required; and must be an officer of a licensed trust company.

Governed by The International Companies Act 1981-1982.

Cook Islands International Business Company (IBC)

• Written resolutions sanctioning any power exercised by the members of the council of the foundation.

• Details of enforcer, including date of appointment; and

• Records of financial position of the foundation.

There is no time limitation to the life of the foundation.

Like having a protector in a trust, a foundation may appoint an enforcer whose role is to ensure that members of the council carry out their duties.

Unlike in a trust, the duties of members of the council are not fiduciary and are owed to the council itself and not to its beneficiaries. A beneficiary under a foundation has no legal or beneficial interest in the foundation’s assets. Like a company, the assets are owned by the foundation.

A Cook Islands foundation can be migrated to another country so long as: it is not bankrupt or a receiver or administrator has not been appointed; there are no proceedings relating to the solvency of the foundation; and the other country allows the transfer. Alternatively, an overseas foundation may be registered as a Cook Islands foundation.

How long does it take to form a private Foundation?

The length of time from first receiving instructions to establishing a foundation will depend on the submission and verification of due diligence documents. As long as all the requested information and original documents have been provided, and due diligence has been completed and passed, a foundation can be incorporated and registered within 3-5 working days.

Should you have any questions, then please do not hesitate to contact us at:

Southpac Trust Cook Islands Limited ANZ House, P.O. Box 11, Maire Nui Road, Avarua, Rarotonga, Cook Islands.T: +682 20 514www.southpac.co.ck

A beneficiary declares any distributions it receives from the foundation in their home country and will only pay taxes in that country.

Features of a Foundation

Like a company, a foundation has its own legal personality which is capable of suing and being sued.

The Act does not allow for nominee founders.

There is no minimum capital requirement, however the founder is required to endow assets/funds to the foundation. Assets can be added by any third party; this will not qualify the third party as a founder.

Unlike a trust, there is no requirement that there be beneficiaries of a Cook Islands foundation. However, it must have objects which may be charitable or non-charitable or both. The object may be to benefit a person(s) or to carry out a specified purpose or both.

The foundation’s actions are governed by the objects stated in the rules of the foundation. It may engage in commercial trade through the foundation or an underlying entity so long as it is incidental to its objects.

Southpac Trust as the foundation’s registered agent will provide the registered office for the foundation and must keep in its possession the following:

• A copy of the foundation rules governing the operation of the foundation and its objects;

• A register showing the names and addresses of the members of its council and dedicator;

Introduction

Cook Islands foundations are governed by the Foundations Act 2012 and are mostly used for estate planning and/or philanthropy. A foundation is a hybrid of a company and trust, operating like a company but having governance features similar to trusts. Whilst ordinarily found in civil law jurisdictions, a Cook Islands foundation offers an alternative wealth planning vehicle for clients not familiar with trusts and/or who may be looking for asset protection measures not ordinarily offered with foundations from other jurisdictions.

Benefits of a Cook Islands Foundation

Foundations may be charitable, non-charitable or both and can be established to benefit a person(s) or to carry out a specified purpose or both.

Foreign forced heirship laws are specifically excluded by the Act. This means that the incorporation or the endowment of a foundation will not be void, voidable, set aside or declared invalid because it avoids or defeats forced heirship rights, claims or interest available in another jurisdiction.

Foreign judgments, or orders including divorce outside of the Cook Islands, will not be recognised or enforced.

A creditor can attack a foundation where they can prove beyond reasonable doubt that the founder was insolvent or intended to defraud the creditor at the time the founder transferred property to the foundation. The statute of limitation is very short so a claim can only be brought within two years of the transfer of property to the foundation having taken place.

The Cook Islands does not levy capital gains, gift, stamp duty or any other form of taxation on the foundation. Distributions from the foundation are not taxable within the Cook Islands.

Cook Islands Foundation

NEW ZEALAND COOK ISLANDS NEVIS

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delivering bespoke wealth preservation strategies across borders.

Our culture balances service to clients, fulfilment to employees and returns to shareholders with corporate social

responsibility to our community.

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