In response to the global demand for flexible offshore company structures, the Cook Islands’ Limited Liability Companies Act was enacted in 2008 based on the model adopted in Nevis and several U.S. States.
A Cook Islands LLC is a blend of both partnership and corporate structures, protecting LLC members from the debts incurred by the entity by separating the rights and obligations of the LLC from those of its members. A Cook Islands LLC is a flexible entity that allows the company to form its structure according to its operating agreement, rather than through rigid legal statutory mandates.
A Cook Islands LLC can be incorporated as a standalone entity, but is often incorporated for use as an underlying asset holding company coupled with a Cook Islands International Trust in an Asset Protection Trust structure. An LLC provides an additional layer of protection for members from the debts incurred by the LLC. The Cook Islands LLC used in conjunction with a Cook Islands International Trust may be one of the best asset protection tools available worldwide when operated properly and paying due regard to the role of the trustee.
Why you should consider a Cook Islands LLC:
- The Cook Islands jurisdiction is distinguished for its asset protection and privacy legislation.
- Relatively cost effective and can be registered quickly as long as all compliance obligations are met.
- Less administrative processes than most corporations.
- No public LLC registry regarding managers, members or beneficial owners. This information is kept private and only known by the licensed trustee company.
- Annual filing of accounts is not required to the Registrar.
- No company secretary required. Registration is maintained by the registered agent.
- Transfer of existing LLCs to the Cook Islands is possible.
- The LLC can be managed by the members or by the manager independent of the members.
- The liability of the members is limited to the extent of their capital contribution.
- There is no need to register a minimum or maximum capital contribution.
One of the most attractive features of a Cook Islands LLC is its unique asset protection characteristics:
- Foreign court orders and judgments will not be enforced or recognized in the Cook Islands.
- The only remedy for a creditor against a LLC’s memberships interests is to apply for a charging order from the Cook Islands High Court.
- Even if a charging order is granted in favor of a creditor, it shall not constitute a lien against a member’s interests in the LLC, and it will not provide the creditor with any rights of assignment over the LLC’s membership rights.
- Charging orders are non-renewable and expire after 5 years.
- While a charging order is in place, the creditor cannot interfere with the management of the LLC including the sale or seizure of any assets, cannot restrict the business of the LLC and cannot dissolve the LLC.
The Cook Islands LLC is a flexible and cost-effective product, with a few straightforward formalities that need to be followed:
- Ultimate beneficial owners, members and managers of LLCs must provide due diligence to the registered agent and keep this up to date in compliance with Cook Islands AML regulations.
- 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.
- A Cook Islands LLC must include the name “Limited Liability Company” or its abbreviation “LLC” at the end of its company name and can only be registered by a licensed trustee company in the Cook Islands, which provides registered agent services. The registered agent is required to maintain the LLC registration annually.
Southpac Trust Limited is a licensed trustee company in the Cook Islands and has worked with thousands of clients since establishment in 1982 to register and maintain their asset protection structures, which have included LLCs since the enactment of the Limited Liability Companies Act in 2008.
If you would like more information with regards to a Cook Islands LLC and how this product can benefit you, please contact us and speak to one of our friendly client services team members about the option or structure that best suits your needs.
