Cook Islands Companies and Cook Islands Trusts

General Introductory and Offshore Tax Information

As an offshore jurisdiction, the Cook Islands are a safe for incorporating offshore companies and offshore business entities. Cook Island offshore business entities are ideal as asset management, tax and estate planning and for conducting business. Cook Islands offshore business companies regulated in accordance with international requirements and are competitively designed to ensure that they fulfill their purpose.

In June 2009, the Money-changing and Remittance Business Act became effective and was legislated in order to license and supervise companies providing money changing and remittance services in the Cook Islands. In September of the same year, the Cook Islands were accepted as full members of the Offshore Group of Banking Supervisors (OGBS). These developments indicate the Cook Islands’ commitment to meeting international financial standards for countering illegal financial activity while implementing regulatory standards.

Cook Island offshore companies are not taxed on income, profits, inheritance, estate or capital gains. This is one of the ways that Cook Islands offshore business companies are able to help maximize profits as the risk of double taxation does not exist as far as the Cook Islands are concerned as the jurisdiction of formation. The owners of a Cook Island offshore business entity is legally accepted around the world as legitimate vehicles for business transactions, insurance schemes and trust. Cook Island offshore business entities are only liable to fees that are required to be paid year for license renewal and maintenance in good standing.

Cook Islands Offshore Business Entities:

• Cook Islands Offshore/International Trusts
• Cook Islands International Business Companies
• Cook Islands Offshore/International Insurance
• Cook Islands Offshore/International Partnerships
• Cook Islands Limited Liability Company (LLC)

Cook Islands Offshore/International Trusts

Main Features:

• The International Trusts Act (1984) and Amendments (1985, 1985, 1995-6, 1999 & 2004) governs Cook Island offshore trusts
• For this Cook Island offshore business entity, one of the trustees of donors must be an international company, a registered foreign company or a trustee company or a trust created in another jurisdiction but registered under the Trust Act of the Islands
• A trust instrument may be executed within or outside the Cook Islands
• The rule against double possibilities is abolished and non applicable to trusts established in the Cook Islands; land or valuables held in a trust are not restricted from being benefited from by unborn children
• The rule against accumulations is abolished and non applicable to trusts established in the Cook Islands
• The rule in Saunders v Vautier is applicable; a trustee may earn income or choose to stay away from distributing income or capital until a given date or event
• The rule against accumulations is abolished and non applicable
• Cook Island offshore trusts are all required to have a registered office
• Offshore trusts are given the power of revocation

Charitable Trusts

• These are trusts formed for charitable purposes such as protecting the environment, the upkeep of social justice and religion

Purpose Trusts

• These are Cook Island offshore trusts which are established for any given legal reason other than charity, once legal under the law

Cook Islands International Business Companies

Main Features:

• The Cook Islands International Companies Act 1981-82 (amended from years 1986 to 2006) govern Cook Island International companies (offshore companies)
• Cook Island IBC’s may change status with respect to liability to any of the corporate forms
• Residents, citizens or international companies registered under the Companies Act 1970-71 may not be beneficial owners of shares in an international company
• Only a trustee company may hold shares beneficially in an international company
• International companies may not venture into banking, trustee or insurances services unless they are issued with the relevant banking or insurance license
• Cook Island international companies may be required to file various documents with the Registrar via the services of a trustee company as prescribed by law
• This Cook Island offshore business entity is capable of registering as an international shipping company
• An international company formed under the laws of another jurisdiction may continue into the Cook Islands
• May issue debentures in accordance with the terms set out in the Articles or Memorandum
• The names of this Cook Island offshore business entity may include any of the following endings: Limited or Ltd., Corporation or Corp., Incorporated or Inc., Berhad or Bhd, Société à Responsabilité Limitée or SARL, Société Anonyme or S.A., Sociedad Anónima or S.A., Besloten Vennootschap or B.V., Gesellschaft mit bescrankter Haftung or GmbH, Naamloze Vennootschap or N.V., Aktiengesellschaft or A.G., Public Limited Company or P.L.C.

IBCs incorporated in Cook Islands may take the following forms:

• Company limited by shares
• No liability company
• Unlimited company
• Company limited by guarantee
• Company limited both by shares and guarantee
• Mutual company

Cook Islands Offshore/International Insurance

Types of Insurers

• Domestic Insurer
• External Insurer
• External insurance intermediary

Types of Insurance Licenses

Category A Licence

• All Cook Islands offshore insurance companies are regulated under the Insurance Act 2008
• Category A Licenses are only granted to companies formed under the Companies Act
• The holders of A licenses are able to conduct insurance business as well as undertake domestic ventures

Category B Licence

• Cook Island offshore insurance companies with this license are only granted to external insurers engaged in insurance business from a branch office located in the Cook Islands
• Category B licenses enable insurers to conduct domestic insurance business in the Cook Islands

Category C Licence

• Category C Licenses are only granted to companies which are created under the International Companies Act
• Holders of this licence may only engage in international insurance business
• Licensees are required to maintain copies of its records and financial statements at the registered office in the Cook Islands

General Features

• Licenses allowing insurers to conduct both general and long-term business are not issued by the Commission
• A company applying for a Category A license must be limited by shares
• Only external insurers may apply for a Category B license
• The Applicant for a Category C license must be an international business company which is limited by shares

Domestic Insurers

• Provide insurance services only to local residents
• Provide insurance only against risks existing in the Cook Islands

External Insurer

• Refers to an insurer formed or incorporated outside the Cook Islands

External Insurance Intermediary

• Is licenced under the Act but does no business within the Cook Islands
• Where a company is involved, is constituted under the laws of a foreign jurisdiction
• Where a partnership is involved, maintains a main office outside the Cook Islands and not locally
• Where an individual is concerned, resides outside the Cook Islands

• The International Partnership Act 1984 (amended in 1999 and 2004) regulates Cook Island offshore partnerships
• This Cook Islands offshore business entity is required to submit a completed certificate by a trustee stating whether one of the partners is an international company, a registered foreign company or trustee company and that every partner does not reside in the Cook Islands
• Cook Islands offshore partnerships may not undertake any offshore banking unless being granted with the relevant banking license
• Certificates of Registration are effective and valid for one year after which they are required to be renewed
• Offshore partnerships are required to have a registered office within the Cook Islands
• The registered office is required to be that of a partner trustee company, an international company or a registered foreign company

Limited Partnerships

• Cook Island Limited Partnerships are legislated under the International Partnership Act 1984 (amended in 1999 and 2004)
• One of the partners is required to be either a registered foreign company, a trustee company or an international company
• The partners of this Cook Islands offshore business entity must be non-residents
• Required to have at least one or more limited and general partners at the time of registration
• Maximum duration of 51 years
• Certificate of registration is effective and valid for one year

Law

• Banking Act 2003

Types of Licenses

Domestic Banking License

• Granted for providing bank services in and from within the Cook Islands

International Banking License

• Granted for doing international banking business in or from within the Cook Islands

Restricted International Banking License

• Granted for providing limited or specified international banking services
• Only granted to foreign banks
• Required to appoint a trustee company as its locally based agent

• Cook Islands Limited Liability Companies should end their names with the expressions limited liability company or the abbreviation L.L.C or LLC.
• Anyone who intends to incorporate a Cook Island limited liability company is able to reserve a company name
• The constitutional document of the Cook Islands LLC is the Articles of Organization
• The Articles of Organization lays out the company’s name, the registered agent’s name and business address, and the duration of time establish for the company to operate
• A Certificate of Organization is the incorporation certificate issued to LLC’s by the Registrar
• All Cook islands LLC’s are required to have a registered agent and office in the Cook Islands
• The Limited Liability companies Act 2008 regulates Cook Islands Limited Liability Companies
• An LLC which was incorporated outside the Cook Islands is capable of domiciling into the Cook Islands