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Cook Islands Offshore Company

The Cook Islands offer an attractive jurisdiction for offshore company formation, recognized for its robust privacy laws and favorable tax environment. With a stable political climate and adherence to international standards of financial regulation, the Cook Islands has established itself as a credible location for global business operations. The legal framework for company formation is primarily governed by the International Companies Act (ICA) of 1981, which has been designed to simplify the incorporation process while providing efficient and flexible corporate structures.

Overview

The Cook Islands enjoys a strategic location in the heart of the South Pacific. It sits within an Exclusive Economic Zone that spans over 2 million square kilometers, providing a gateway for businesses to tap into the vast markets of Oceania. The accessibility to the South Pacific not only offers economic benefits but also cultural ties that contribute to the business environment.

The Cook Islands has a free association with New Zealand which allows for a stable economic structure influenced by English common law. The citizens of the Cook Islands hold New Zealand citizenship, providing businesses with a workforce that has ties to both Polynesian culture and New Zealand's more Westernized practices. Moreover, the proximity to Hawaii establishes a cultural bridge that has historical significance and potential for tourism and business collaborations within the Pacific Triangle.

A Cook Islands Offshore Company

A Cook Islands International Company (IC) or International Business Company (IBC) as it is refereed to in other jurisdictions, is an offshore entity giving individuals and corporations numerous advantages such as security and tax planning benefits. The Cook Islands are a total of fifteen islands located in the South Pacific, northeast of New Zealand and between American Samoa and French Polynesia.

The Cook Islands offshore financial sector emerged in 1982 with the passing of the Cook Islands International Companies Act, which was later accompanied by an amending piece of asset protection legislation that is regarded as the most comprehensive and secure pieces of legislation in the world, firmly ensuring the assets of foreign Cook Island investors.

Over the years, the Cook Islands government has, time and time again, supported its position as an offshore financial center, refusing to comply with foreign directives and court orders seeking to strong arm the local government and breech the impenetrable Cook Islands offshore structures. The last few years the Cook Islands, in order to comply with new international standards by the OECD and anti money laundering directives, have had to institute several automatic tax agreements and reporting requirements.

Companies incorporated in the Cook Islands enjoy structural flexibility and simple administrative procedures in a highly secure and confidential location. There are minimal reporting and regulating restrictions with comprehensive protective offshore laws that ensure client security.

There are no other offshore jurisdictions that can boast of such extensive asset protection measures—the Cook Islands are truly the safest place in the world. The Cook Islands also offers two other widely-used offshore formation products for their strong asset protection and security measures.

For more information on the Advantages of Cook Islands as an Offshore Financial Center, click here.

Table of Contents:

cook islands

Advantages of a Cook Islands Offshore Company

A Cook Islands IC enables companies and individuals to benefit from a number advantages including, but not limited to:

  • Nominal tax (20% on profits)
  • Political and economic stability
  • Strict enforcement of legislation
  • The world's most secure asset protection trust legislation
  • An English Common Law System
  • English speaking country
  • Minimum disclosure requirements
  • Currency diversification
  • Limiting personal liability
  • Flexible requirements
  • Minimum financial reporting requirements
  • Fast incorporation
  • Straightforward registration procedures
  • No limitations to the share capital value and currency
  • No requirements of minimum paid-up capital

 

   

 
 
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Antecedents and Legal Framework

In the realm of international business, the Cook Islands stand out for their adaptive legal framework and strategic implementation of laws that have shaped their status within the global financial community.

History of the Cook Islands in International Business

The Cook Islands, located in the South Pacific, have long established themselves as a beacon for international business and finance. This self-governing state, in free association with New Zealand, has utilized its geographical position and legal adaptability to attract offshore companies and investments. Its legal system, based on English Common Law, offers familiarity and reliability to international investors and business entities. With historical ties to both traditional British jurisprudence and local customs, the Cook Islands have crafted a financial landscape that balances modernity with a respect for legacy.

Overview of the International Companies Act of 1981

At the heart of Cook Islands' offshore financial services is the International Companies Act of 1981. This pivotal legislation was designed to provide a comprehensive legal structure for the formation and operation of non-resident companies. Below are some key features of the Act:

  • Formation Requirements: Streamlined company registration, removing onerous paperwork such as the Memorandum of Association and Articles of Association originally required under old law.
  • Confidentiality: Ensures strong privacy protection for company directors and shareholders.
  • Flexibility: Allows companies to sculpt their internal structures to suit individual needs, rather than conform strictly to rigid mandates.

Through the implementation of the International Companies Act of 1981, the Cook Islands legislated a proactive step towards creating a business-friendly environment that facilitates privacy, ease of company formation, and compliance with international regulatory standards.

Benefits of Incorporating in the Cook Islands

The Cook Islands offer a robust legal framework and considerable tax advantages, making it an attractive location for foreign investors interested in asset protection and tax exemption.

Asset Protection Laws

The Cook Islands' legislation provides strong asset protection measures for international businesses. The International Companies Act of 1982, along with subsequent amendments, has been designed to safeguard assets against potential claims. Companies incorporated in the Cook Islands can benefit from these laws, which are often recognized as some of the most resilient in the South Pacific Ocean region.

  • Legal Protections: Statutes that limit the ability of foreign creditors to lay claims on a company’s assets.
  • Privacy: Companies enjoy confidentiality, with ownership information shielded from public view.

Tax Advantages for International Companies

Incorporating in the Cook Islands also hallmarks significant tax advantages for international companies. The region promotes a tax-neutral environment, meaning that businesses can benefit from:

  • Tax Exemption: Full exemption from local taxes for income derived from outside of the islands.
  • No Capital Gains Tax: Absence of taxes on capital gains, providing relief during asset disposition or corporate restructures.

Foreign investors find these tax incentives appealing, as they maximize the efficiency of international operations while legally minimizing tax obligations.

Corporate Structure

In the Cook Islands, the corporate structure determines the hierarchy of the business entities and outlines the distribution of roles within the organization.

Types of Business Entities

Limited Liability Company (LLC): This entity provides flexibility in that it allows the owners, known as members, to establish their company's structure based on their own rules. An LLC separates the personal liabilities of the members from the obligations of the business entity itself.

  • Single Member LLCs: The Cook Islands allows the formation of an LLC with a minimum of one shareholder, catering to small businesses and solo entrepreneurs.
  • Multiple Member LLCs: There is also the option to have more than one member, preferred by larger business ventures where multiple parties contribute capital and share in the profits.

Roles and Responsibilities of Shareholders and Directors

Shareholders are the individuals or entities that own shares in the company. They are responsible for making crucial decisions that affect the company's future, commonly through voting on major corporate matters.

  • Minimal Role in Management: Typically, shareholders do not participate in the day-to-day management of the company; this aspect is handled by the directors.
  • Profit Entitlement: They are entitled to a proportion of the company's profits in the form of dividends, depending on the amount and type of shares they hold.

Directors are appointed to manage the company's affairs and make decisions on its behalf. The board of directors acts as a governing body overseeing the LLC's operations with a focus on shareholders' interests.

  • Fiduciary Duties: Directors have fiduciary duties to the company, including acting in good faith and in the company's best interest.
  • Management Responsibilities: They handle the strategic direction, policy making, and are typically involved in major financial decisions.

Regulatory Compliance

In the Cook Islands, company formation is met with an emphasis on compliance to local and international regulations to maintain the integrity and accountability of the business environment. The key to successful operation involves adhering to annual reporting and audit requirements, and aligning with international standards, especially considering the close scrutiny of offshore jurisdictions.

Annual Reporting and Audit Requirements

Companies in the Cook Islands are required to file annual returns to remain in good standing with the registrar. These returns include key financial information and updates on the company’s directors and secretaries. Additionally, certain companies may be subject to audit requirements under the International Trusts Act. These audits must be conducted by a certified accountant to ensure the accuracy of financial statements and compliance with the Act.

  • Annual Returns: Due annually and should reflect current corporate structure and financial health.
  • Audit Requirements: Mandatory for businesses that meet certain criteria as defined by law, ensuring transparency.

Adherence to International Standards

The Cook Islands has committed to abide by the standards set by global financial and regulatory organizations, including the Organisation for Economic Co-operation and Development (OECD). This includes the implementation of various regulating restrictions that aim to prevent money laundering, tax evasion, and financing of terrorism.

  • OECD Compliance: Adoption of global regulatory practices to prevent illicit financial activities.
  • Regulating Restrictions: Constraints on business operations are in place to align with international legal frameworks and deter malpractices.

Financial Considerations

When registering a company in the Cook Islands, it is important to understand the unique financial requirements and services available. These include compliance with share capital regulations and navigating the local banking landscape, which are critical for the successful operation of an offshore business.

Share Capital and Funding

In the Cook Islands, companies must comply with specific share capital requirements. The minimum share capital is not stipulated by the law, which provides flexibility for investors. However, shareholders have the autonomy to determine the value of share capital that aligns with their business needs. Funding can be sourced through various avenues, with the New Zealand Dollar often being the preferred currency due to its stability and widespread acceptance in the Islands.

Banking and Financial Services

Bank accounts are requisite for businesses in the Cook Islands and the process to open one is relatively straightforward. Companies benefit from robust banking and financial services provided by a network of local and international banks. The Cook Islands provides facilities for multi-currency accounts, and these accounts typically operate in New Zealand Dollars among other major currencies. Entities should note that while interest earned on deposits may be subject to local conditions, the Cook Islands does not levy a standard withholding tax on the interest, which is advantageous for offshore financial operations.

Trusts and Estates

In the Cook Islands, trusts and estates are recognized as robust vehicles for asset protection and estate planning. Specifically, International Trusts offer a reliable means of safeguarding assets, while the jurisdiction's robust legislation provides a solid fortress against potential risks.

International Trusts

The Cook Islands International Trust, governed by specific Cook Islands legislation, is a favored instrument for asset protection. These trusts must adhere to legal requirements in terms of trust deed documentation, which dictates the terms, parties involved, and provisions. An International Trust may also be guided by a letter of wishes that informs the trustee's decisions regarding asset distribution.

Key Features of a Cook Islands International Trust:

  • Governing Law: Cook Islands specific trust legislation.
  • Documentation: Trust deed and optional letter of wishes.
  • Parties: Typically involves a settlor, trustee, and beneficiaries.

Solid Asset Protection

Asset protection is a cornerstone of the Cook Islands legal framework, especially when it comes to trusts. The Solid Asset Protection Law keeps the assets secure from external risks such as lawsuits and creditor claims.

Advantages of Cook Islands Trusts for Asset Protection:

  • Legal Structure: Ensures protection during litigations or claims.
  • Privacy: Trust details and assets are not publicly disclosed.
  • Control: Settlors may retain some degree of control, as permitted by law.

Establishing a Cook Islands Trust or International Company (IC) in this jurisdiction offers a strategic advantage for those looking for privacy and strong legal protections for their assets.

Privacy and Confidentiality

The Cook Islands is renowned for its robust privacy and confidentiality provisions, which form an integral part of its offshore financial services industry.

Securing Information

Entities incorporated in the Cook Islands benefit from comprehensive measures designed to secure sensitive information. These measures include:

  • Non-Disclosure Provisions: The corporate legislation mandates non-disclosure of shareholder and director information, ensuring anonymity.
  • Stringent Data Protection: Financial institutions adhere to strict data protection protocols to safeguard client information from unauthorized access.

Privacy Laws and Regulations

The legal framework of the Cook Islands offers a fortified landscape for privacy:

  • International Companies Act 1981-1982: Sets forth the framework for company information confidentiality.
  • Asset Protection: The Cook Islands are particularly known for laws that favor strong asset protection, which complements privacy by securing assets against external claims.

Companies in the Cook Islands utilize various legal structures such as trusts to enhance privacy. The International Trusts Act 1984 provides a legal framework that upholds the confidentiality of trust arrangements. This rigor in privacy regulations ensures the jurisdiction remains a top choice for investors seeking discretion.

Moreover, the Cook Islands does not participate in automatic exchange of information agreements, like the Common Reporting Standard (CRS), which reinforces its position on ensuring client privacy.

Top Uses 

There are no restrictions from doing business anywhere outside of the Cook Islands, except where activities are deemed as being illegal or require a license to legally conduct such business.

The only limitations are in conducting business within the Cook Islands and when such activities are in banking, insurance or real estate, which require an appropriate license.

The formation of an IC can be used for, including but not limited to:

  • Offshore savings and investments
  • Manufacturing
  • Transportation
  • Trade and distribution
  • Forex and stock trading
  • E-commerce
  • Professional service company
  • Confidentiality
  • International trading
  • Financial management
  • Protection from foreign judgments

In addition to International Companies, the Cook Islands also offers other popular offshore vehicles renowned for their asset protection features:

Foundations: These separate legal entities are managed by a council without shareholders. They can hold assets, conduct transactions, have beneficiaries like trusts or be set up for charitable purposes. Foundations offer asset protection, inheritance planning and wealth management benefits.

Limited Liability Companies (LLCs): Blending partnerships and corporations, LLCs provide members with limited liability protection from debts. They are commonly used as underlying asset holding companies within Cook Islands trust structures for robust asset protection.

Key Corporate Features

Cook Islands Company Corporate Details
General  
Type of Entity International
Type of Law Common Law
Governed by

The International Companies Act 1981-1982
Limited Liability Company Act 2008
Banking Act 2011
Foundations Act 2012
International Trusts Act 1984
Financial Supervisory Commission Amendment Act 2003
+Several pieces on legislation related to insurance, partnerships, trustee companies and more

Registered Office in Cook Islands Yes
Shelf company availability Yes
Our time to establish a new company 3 days
Minimum government fees (excluding taxation) USD $300.00
Corporate Taxation Yes
Access to Double Taxation Treaties Yes
Share capital or equivalent  
Standard currency NZD New Zealand Dollar (NZD 1.15 = USD 1.0)
Permitted currencies Any
Minimum paid up No minimum
Usual authorized USD $5,000
Bearer shares allowed Yes
No par value shares allowed Yes
Directors  
Minimum number One
Local required No
Publicly accessible records No
Location of meetings Anywhere
Corporate directorship allowed Yes
Shareholders  
Minimum number One
Publicly accessible records No
Corporate shareholder allowed Yes
Location of meetings Anywhere
Company Secretary  
Required Yes
Local or qualified Yes
Accounts  
Requirements to prepare Yes
Audit requirements No (by resolution)
Requirements to file accounts No (by resolution)
Publicly accessible accounts No
Recurring Government Costs  
Minimum Annual Tax USD $300
Annual Return Filing Fee None
Incorporation fee NZD $75
Annual return filing fee NZD $50 (increases to NZD $200 if filed more than one month after the due date)
Incorporation fee overseas IC NZD $500
Annual return overseas IC NZD $300 (increases to NZD $500 if filed more than one month after the due date)
Other  
Requirement to file annual return Yes
Migration of domicile permitted Yes

Packages Includes

  1. Government Registration Fee (First year)
  2. Registered Office Address (First year)
  3. Registered Agent Services (First year)
  4. Company Secretarial Maintenance
  5. Certificate of Incorporation
  6. Memo & Articles of Association
  7. Appointment of 1st Directors
  8. Consent Actions of the BOD
  9. Share Certificates
  10. Register of Directors
  11. Register of Officers
  12. Register of Shareholders
  13. FREE Phone and/or email consultations

 

Incorporation Requirements

The requirements to register a Cook Island IC are straightforward. A registered agent, acting through a Cook Islands trustee company will submit the necessary documents needed to the Registrar, including:

  1. Choose a Company Name: One must select a suitable company name, ensuring it is unique and not already in use.
  2. Appoint a Registered Agent: A local registered agent is necessary to handle legal and official documentation.
  3. Supply Company Information: Essential details such as a brief description of the business activities, names, addresses, nationalities, passport numbers, and occupations of the directors and shareholders are required.
  4. Submit Government Fees: Payment of the applicable government registration fee is a crucial step in the registration process.
  5. File the Documentation: All pertinent incorporation documents must be filed with the Cook Islands' registrar. This typically includes Articles of Association and a Memorandum of Association.

The Cook Islands Companies Act 2017 simplified registering International Companies. It requires a company constitution, allowing tailored operating agreements. Standard constitutions are available based on shareholder count. The Act also introduced an online registry system for all filings.

In terms of residency, at least one director must reside in the Cook Islands or New Zealand.

 

   

 
 
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Company Taxation

A Cook Islands offshore International Company is not exempt from taxes. This includes, but is not limited to:

  • Income tax
  • Capital gains tax
  • Sales tax
  • Stock sale or transfer tax
  • Capital stock tax
  • Property tax
  • State tax
  • Gift tax
  • Stamp tax
  • Succession tax
  • Inventory tax

It's important to note that recent legislative changes have impacted the tax exemption status for new Cook Islands companies. Effective from December 2019, any newly incorporated International Company is subject to Cook Islands corporate tax at 20% on profits, as per the Income Tax Act 1997. There is also a 15% withholding tax on dividends paid to foreign shareholders. Existing companies incorporated prior to this date were granted a transition period until December 2022 to start filing tax returns and become compliant with the new rules.

Company Corporate Details

international company formation

The primary legislation governing Cook Islands companies is the International Companies Act 1981-1982. Other key Acts regulating the offshore sector include the Banking Act 2011, Foundations Act 2012, Limited Liability Companies Act 2008, International Trusts Act 1984, and several other pieces of legislation related to insurance, partnerships, trustee companies and more. You can find links to the full text of these Acts on the Financial Supervisory Commission's website.

Official Language

The official language is English although Cook Islands Maori is spoken amongst the local population.

Language of Company Name

A Cool Islands International Company may be in any language however it must be accompanied by an English translation

Exchange Controls

There are a few restrictions when dealing in New Zealand Dollars; however there are no restrictions on the movement of funds in any other currency

Type of Law

English Common Law

Principal Corporate Legislation

The International Companies Act 1981-1982 outlines the details for all International Business Companies (IBCs)

Other Offshore corporate legislations dealing with companies and services include:

  • International Trusts Acts 1984
  • Limited Liability Company Act 2008

And other corporate legislation dealing with banking, insurance and investing:

  • Cook Islands Monetary Board Act 1981
  • Offshore Banking Act of 1981
  • Trustee Companies Act of 1981-82
  • Offshore Insurance Act, 1981-82
  • International Partnerships Act 1984

The Cook Islands Companies Act 2017 and 2021 amendment further streamlined incorporation and regulations. All company registrations and filings must now be submitted online to the Registrar through an electronic filing system.

Restrictions to Company Name

A company cannot use an identical or similar name of a company that is already incorporated

Suffixes of Limited Liability

A Cook Islands International Company must use Limited or Ltd to denote liability

Classes of Shares Permitted

Preference shares, redeemable shares, shares with or without voting rights and shares of no par value are all permitted

 

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Taxation

Any International Company incorporated in the Cook Islands is not exempt from all local taxation. Legislative changes removed exemptions for new companies incorporated after December 2019. Companies are now subject to a 20% corporate tax rate on profits under the Income Tax Act 1997, and a 15% withholding tax on dividends paid to foreign shareholders.

Confidentiality and Anonymity

Nominee services are allowed which ensures confidentiality

Restrictions

An International Company is restricted from conducting business within the Cook Islands, as well as holding any business in real estate, insurance, or banking without the proper license.

Directors

The minimum number of directors is one. Directors may be either a body corporate or a natural person. They may of any nationality and need not be resident in the Cook Islands.

Secretary

A Cook Islands local qualified secretary must be appointed

Shareholders

There must be one shareholder, either and individual or a corporate body

Corporate Meetings

Meetings can take place anywhere in the world

Double Tax Treaties

There are no Double Tax Treaties although the Cook Islands have signed sixteen different Tax Information Exchange Agreements with other countries. However, this provision is only related to criminal matters as the Cook Island authorities never respond to foreign court orders or tax information related requests.



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***Please Note: If you are a resident of a country that is a signatory of the Common Reporting Standard (CRS) (or a US citizen) your tax reduction possibilities are limited. Due FATCA, CRS, and CFC laws you may not be able to completely eliminate your taxes without moving your residence (or US citizenship.) While opening an offshore company can increase privacy and asset protection, your tax obligations remans tied to your ownership of overseas entities. Offshore company's are often not taxed in the country where they are incorporated, rather you as the owner are obligated to pay taxes in the country where you reside. Please make sure you know your tax obligations, as we are not tax advisors. Please seek a local tax professional for help regarding your situation. 

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