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This structure was designed based on a Trust in Cook Islands and a Special Purpose Trustee Company in Cook Islands.

The following types of International Company exist in the Cook Islands:

• No-liability Companies
• Companies Limited by Guarantee
• Unlimited Companies
• Mutual Companies.

A Cook Islands International Company has the same powers as a natural person. English is the official language of legislation and corporate documentation.

The following restrictions apply to a company's trading and business activities:

• A Company cannot trade within the Cook Islands;
• A Company cannot engage in the business of banking or insurance unless licensed under the Offshore Banking Act or the Offshore Insurance Act.

The incorporation procedure involves filing the Memorandum of Incorporation with the Registrar of International Companies. As a matter of local company law, the company must maintain a registered office address within the Cook Islands and must also appoint a Cook Islands resident as registered agent. Off-the-shelf companies are available.

Company names are subject to the following requirements:

• A name can be in any language, but must be accompanied by a translation into English.
• A name must not be similar to that of a Company that has already been incorporated.
• A Company name should have the suffix "Limited" or "Ltd." to denote limited liability.

The minimum number of directors is one. Directors may be either a body corporate or a natural person. They may be of any nationality and need not be resident in the Cook Islands. A Cook Islands resident Company secretary must be appointed. A minimum of one shareholder is required. No details of shareholders appear on the public files.

There are no requirements with regard to minimum issued share capital. The following classes of shares are permitted: bearer shares, preference shares, redeemable shares, shares with or without voting rights and shares without par value.

International entities including International Companies are exempt from taxation.

The sum of US$ 500 must be paid when the company registers, and annually thereafter.

Financial statements: all companies must lodge annual returns accompanied by audited accounts; however, this requirement can be dispensed with by company resolution.




The Cook Islands is a progressive offshore jurisdiction with sophisticated and innovative legislation designed for

asset protection trusts
international companies
mutual funds
offshore banks
insurance companies,
and international partnerships

Next, we outline the Cook Islands offshore legislation and the services provided by EUROFINANZZA

A Company is not permitted to carry on business in the Cook Islands as a trustee company unless it is registered pursuant to the provisions of the Cook Islands Trustee Companies Act 1981-1982.

Carrying on business as a trustee is widely defined and includes acting as trustee, executor or administrator.

The control of the registration of trustee companies lies with the Cook Islands Financial Supervisory Commission, which looks at the suitability of the applicant and the experience of this associated with the applicant. Minimum capitalisation requirements also apply.

THE ACT 1981-1982

A Company can be incorporated under the International Companies Act 1981-1982 as an international company if its shareholders are non-resident of the Cook Islands, however, a trustee company registered under the Trustee Companies Act 1981-1982 may hold shares in an international company and may be the sole shareholder. EUROFINANZZA can incorporate an international company within 24 hours of receipt of instructions.

There are no minimum capital requirements and shares may be of no par value. Shares may be designated in most major currencies and bearer shares may be issued (but must be “immobilized” with a Cook Islands custodian, which can be a Trustee Company), unless this is prohibited by the Articles of Association.

Only one director of an international company need be appointed and there is no obligation to appoint a resident director. It is obligatory to have a resident secretary who must be an officer of a registered trustee company. Additional secretaries may be appointed who need not be residents.

An international company may be incorporated for any lawful purpose, other than that of a trustee company, but shall not carry on the business of banking or insurance, unless it is licensed under the relevant Act.

Principals or promoters of international companies may remain anonymous as there is no obligation to disclose any details of beneficial ownership of shares.

Such anonymity is further guaranteed by virtue of the provisions of Section 8(5) of the Act which impose penal sanctions on any person who discloses information derived from an inspection of the records of an international company.

The documents lodged with the Registrar of International Companies are only available for inspection by directors, members and debenture holders. Court proceedings relating to the rights or obligations of officers or members or debenture holders must be heard in camera, unless the Court orders otherwise.

All companies must lodge annual returns accompanied by audited accounts unless the members of the Company (being a private company) resolve at each annual general meeting that auditors should not be appointed.

The legislation expressly provides that international companies and foreign companies registered under the International Companies Act 1981-1982 and their shareholders will not be subject to any form of taxation including stamp duty. The legislation also provides such entities with a guarantee that the Crown will not compulsorily acquire or expropriate their property situated in the Cook Islands except under specified circumstances defined by law.

A foreign company incorporated outside the Cook Islands may register under the International Companies Act 1981-1982 if it has a place of business or is carrying on business from within the Cook Islands. Once registered under the Act it is subject to the same provision as an international company.

The Act permits the incorporation of various types of companies other than companies limited by shares. These include no liability companies, companies limited by guarantee, unlimited companies and mutual companies.

Special features of the Cook Islands International Companies Act 1981-1982 include:

One of the essential criteria for international tax planning is flexibility.

There should be an ability to modify promptly an offshore structure as a consequence of a change in circumstances and the Cook Islands legislation permits such flexibility through provisions which enable a company to transfer its domicile.

The International Companies Act enables:

(a) Companies incorporated in other jurisdictions to transfer their registration to the Cook Islands as international companies,


(b) International companies to transfer their registration to other jurisdictions.

Amendments to the International Companies Act in 1991 provide for International Companies to become listed on a number of major Stock Exchanges. In addition foreign companies already listed on designated stock exchanges can now make application to transfer their domicile to the Cook Islands.

The Act provides considerable flexibility in regard to reduction of share capital. Specifically, the Act allows:

• A Company to purchase and cancel its own shares;
• Redemption of shares without maintenance of capital and without the need for a Court order;
• A Company to finance the purchase of its own shares.

A trust, which is registered under the Cook Islands International Trusts Act 1984 (as amended), is entitled to the benefits and protection provided by that Act. The Act provides a registration system whereby a registered trust is sheltered from both the general common law and Cook Islands statue law insofar as those laws are inconsistent with the Act.

Application for registration is made by a licensed Trustee Company. The application must certify that no resident of the Cook Islands is a beneficiary, advise the date of the trust deed, the name of the trustee and the name of the trust.

There is no requirement to file the trust deed with the Registrar. Any information pertaining to an international trust, including the deed of trust and the identity of parties connected with the trust is confidential and subject to the secrecy provisions of the Act.

The Act creates a flexible tax effective environment in which the familiar English trust concept can be used for both tax planning and asset protections purposes.

The trustee(s) beneficiaries and Settlor of an international trust are exempt from any form of taxation and duty in the Cook Islands. The legislation removes some of the difficult aspects of the common law relating to trusts.

The modern rule against perpetuities has been abolished although if desired a specific perpetuity period can still be selected by the Settlor at the time the trust is established. Other common law rules such as the rule against accumulations and double possibilities do not apply.

The Act, as a consequence of amendments in 1989 and 1991, contains no innovative statutory provisions for the protection of assets held under international trusts.

The legislation overcomes specific common law problems to provide protection for Settlors and beneficiaries from unwarranted claims against trust assets.

More recent amendments in 1996 and 1999 have expanded the definition and role of the protector, expanded the scope of the Purpose Trust and adopted with slight modification Section 50 of the New Zealand Trustee Act 1956 in respect of Custodian Trustees. Asset protection trusts are explained further.




The concept of using trusts to protect assets has been established for several centuries. Asset protection trusts, as they have come to be known, were created to protect beneficiaries from a wide range of potentially adverse eventualities. The common objective has been essentially to protect the assets of the Settlor against the consequences of financial disasters which may arise from the imposition of excessive death duties, the extravagance of family members, mismanagement of business ventures, or from the actions of third parties.

In recent years greater emphasis has been placed upon the need to preserve wealth from the ravages of litigation, political risk and government expropriation, marital or family breakdown, and contingent creditors.

This trend has been fuelled by the economic downturn of the late 1980’s, major political changes in Europe and elsewhere, and the growing influence in international law of the US generated penchant for litigation.

In various jurisdictions we have seen over the past 10 years, an escalation of personal risk as a consequence of penal awards by juries or over zealous courts, increased exposure of non-executive directors as corporate laws become overly protective of creditors and shareholders, and in the case of the latter, the loss of traditional protection as the corporate shield has been removed by legislation. As a consequence liability and professional indemnity insurance protection has become inadequate and, where available, expensive.

Increasingly, wealth protection planning has become an essential consideration in the development of financial strategies of high net worth individuals, company directors and professional practitioners.

In turn asset protection trusts, particularly those based offshore have emerged as a primary component in such planning.

The starting point of any asset protection plan is a consideration of the laws of the client’s domestic jurisdiction. Laws which may be relevant would be those governing issues such as exchange controls, estate duties or inheritance taxes, capital gains taxes, bankruptcy and in particular fraudulent conveyances, and matrimonial settlements.

The relevance or otherwise of such laws will in many instances help determine the nature of the assets which the client will settle into the asset protection trust, and whether or not such trust should be located in an offshore jurisdiction.

It must be recognised that basing an asset protection trust offshore will not absolve the client from the need to comply with his domestic laws. As the principle objective of the client will be to protect assets against the prospect of his or a beneficiary’s future bankruptcy, the domestic laws against fraudulent transfers of property are of paramount importance. In most jurisdictions there are laws which operate to set aside transfers of property which are made with the intent to defraud creditors.

Such intent need not be express and in many instances intent to defraud is deemed to occur where transfers of property are made within a specified period of time.

Often criminal prosecution may result from such actions. It is essential that asset transfers are made well ahead of any potential creditor action, properly documented, and placed in a legal environment which offers the utmost protection from potential attack.

There are a number of reasons why most advisors recommend that asset protection trusts be established offshore. Obviously assets held in a domestic trust are more susceptible to attach. However, one of the principal attractions for placing assets in an offshore trust is the legislation which has been introduced in some offshore jurisdictions specifically to facilitate asset protection.

The Cook Islands was the first offshore jurisdiction to enact such legislation under the International Trusts Amendment Act 1989. Further amendments were enacted in 1991, 1996 and 1999.

As a result the Cook Islands currently has the most modern international trust legislation with particular emphasis on the protection of assets, the protection of beneficiaries and flexibility of “control” by the Settlor.

The Cook Islands international Trust law is derived from English common law but the legislation has removed some of the problem areas of the common law pertaining to trusts.

1. An international trust will not be void or voidable as a consequence of the Settlor’s bankruptcy, notwithstanding any law to the contrary in the Settlor’s domestic jurisdiction.

2. If a creditor establishes that an international trust was settled with the principal intent of defrauding a creditor and such settlement rendered the Settlor insolvent or without property by which the creditor’s claim could be satisfied, the settlement shall not be void or voidable but the trust shall be liable to satisfy that creditor’s claim from trust property which was the subject of such settlement.

3. Generally foreign judgements cannot be entered against an international trust in the Cook Islands.

4. An international trust shall not be fraudulent against a creditor or the Settlor if:

(a) The transfer of property takes place more than two years after the date upon which the creditor’s cause of action arose; or

(b) Such a transfer takes place within two years from the date of the cause of action accruing to that creditor and the creditor fails to bring that action within one year from the date of such transfer.

5. The Settlor may retain certain powers and benefits without invalidating the trust.

6. The interest of a “spendthrift” beneficiary in an international trust may not be alienated by a creditor.

7. The avoidance of forced heirship rights shall not render an international trust void or voidable.

8. A trustee may delegate its functions, discretion’s and powers (other than dispositive powers) beyond the general common law rule on delegation.

9. Co-trustees may make valid decisions as a majority rather than unanimously. Title to trust property may be held by a single co.-trustee.

10. The Settlor, beneficiaries and the international trust are not subject to any form of taxation in the Cook Islands. It is important to note that whilst the legislation allows such flexibility, the provisions outlined in 5. - 9. above do not apply unless specifically adopted in the trust document.

It will be apparent that the Cook Islands constitutes an ideal legal environment for asset protection trusts whilst preserving commercial responsibilities to the creditors.

EUROFINANZZA provides a complete range of international fiduciary services for businesses which utilise offshore locations as a base for their international business operations.

We provide a consultancy support service to professional advisors and their clients. Our extensive experience in offshore financial matters and our creative but practical approach enables EUROFINANZZA to assist professional advisors in maximising the profit potential of their clients. This added value concept also ensures that clients enjoy optimum flexibility in their asset protection and wealth accumulation structures.

EUROFINANZZA network of offices, and contacts in other offshore centres, enables us to facilitate global structures for our clients.

Specifically our services include:

• formation of international companies and registration of foreign companies under the Cook Islands International Companies Act 1981-1982
• corporate secretarial services as required under the relevant corporate legislation including provision of local or non-resident directors, registered office, nominee shareholders and company secretary including maintenance of statutory records and filing of statutory returns.

• general administration services including operation of bank accounts, negotiating trade finance, attending to commercial documentation, handling of letter of credit transactions, invoicing, banking, income collection including royalty administration and general representation
• offshore management services
• accounting services including maintenance of both computerised and manual accounting records, preparation of financial statements and management of bank accounts.

• Registration of trusts under the Cook Islands International Trusts Act 1984 (as amended)
• Trustee services including establishment of inter-vivos settlements and acting as trustee of discretionary family trusts
• Acting as trustee or co.-trustee of asset protection trusts.
• Administration of offshore family trusts and estates
• Nominee facilities for private investments including custodianship and acting as escrow agents
• Acting as trustees or alternate trustees of offshore-based employee pension or provident funds
• Unit trust or offshore mutual fund services including acting as trustee, administrator or custodian of investments
• Provisions of Protector services for trusts in other jurisdictions.

• Private banking services including portfolio management are available through selected international banks and fund management companies.




A private trustee company can provide savings, control, and privacy for clients who prefer not to place their assets with a trustee company owned by a financial institution.

There is a high degree of flexibility in structuring control over the international
company. Control over the business of the company, and thereby the day to day business of the trust, rests with the directors of the company.

While the client is in control of the offshore company, he must be careful to maintain its separate identity as a trustee to avoid any accusation that the structure is a sham

Most offshore jurisdictions require a grantor. To appoint a licensed trustee company to act as trustee of an offshore trust if the trust is to be domiciled in that jurisdiction.

In some jurisdictions, however a client may form a separate offshore company (a private trustee company) for the special purpose of acting as trustee of his
or her trust or trusts, instead of appointing a licensed offshore trustee company.
There are many situations where it may be advisable for a client to form a private trustee company.

The Cook Islands has special provisions ensuring that private trustee companies are easy to establish and operate, as well as being effective. Most importantly, in the Cook Islands there is no need to form a separate purpose trust to hold the shares of a private trustee company, as the different forms
of corporate ownership of a Cook Islands offshore company make this extra entity unnecessary.


A licensed trustee company may be unwilling to act as a trustee of a client’s trust, whether because of the litigation risk applicable to that client, or because of the nature of the asset to be held, or because of the investment activity planned by the client. The planned investment activity may involve the trustee in potential liability, or it may require on the spot decision making which is not practical with a trustee in another time zone.

Some trustee companies require complete control of the trust’s investment activity without client participation. Furthermore, it is common for licensed trustee companies owned by financial institutions to require the investment of client trust funds in financial products of entities related to that financial institution, whereas clients normally want to have the right to choose the funds and products the trust will invest in, as well as the fund manager.

Often the only licensed trustee companies giving the client the security of being owned by a financial institution are exposed in jurisdictions such as the United States because of their worldwide links.

The alternative of placing assets under control of an individually owned trustee company may not be comfortable for the client or his advisers, nor can this risk
be negated by fidelity insurance. Some clients may not even want to disclose the affairs of their trust to the staff (often expatriate) of a licensed trustee company, particularly where the information is politically sensitive.

Finally, where a trust or a group of trusts has a substantial amount of activity, or where the trust assets themselves are substantial, a client can achieve savings by carrying out his own administration rather than have these activities carried out on a time cost basis or on a percentage fee basis by a licensed trustee company.




The Cook Islands International Companies Act (1981-82) (ICA) contains special provisions for a client to form an international company (a private trustee company) for the purpose of acting as a trustee of an international trust, without being independently licensed in the Cook Islands as a trustee company.

Before registering as a Cook Islands international trust, a trust must establish a nexus with the Cook Islands jurisdiction. Section 2 of the International Trusts Act 1984 (ITA) requires a trust to appoint either a licensed trustee company, or a Cook Islands international company, as its trustee.

The international company is permitted to act as trustee for no more than three trusts, but otherwise must not carry on business as a trustee company.

When forming a trust, therefore, the client can first incorporate his own specially structured international company. That international company is eligible for appointment as trustee of the client’s trust, making the trust eligible for registration as a Cook Islands international trust.

The structure of the international company will depend on the level of control the client wishes to exercise over the activity of the company, and thereby the trust. Control over an international company is normally vested in the shareholders and the directors.

The share ownership alternatives in the Cook Islands include the following:

1. The international company can issue bearer shares to the client or his nominee.

2. The international company can issue “default shares” to the client or a nominated party.

3. The international company can be formed as what we call a purpose company, with no shares.

4. The shares of the international company can be held by a licensed trustee company which exercises shareholders voting rights as nominee for the client.

The shares of a Cook Islands international company may provide that on the happening of any specified event (such as the commencement of litigation against the member) the membership interest of any member shall automatically vest in some other specified person or persons.

A Cook Islands international company may be formed as a purpose company.

After incorporation, the shares of the international company are forfeited by the company under a statutory process. The promoter of the company or his nominee is then issued with a perpetual bearer debenture the powers of which enable the bearer to effect appointment and removal of directors.

There is a high degree of flexibility in structuring control over the international company. Control over the business of the company, and thereby the day to day business of the trust, rests with the directors of the company.

The client may want himself or his personal advisors to be appointed as directors, or may request a licensed trustee company to provide the directors.

The client may then want to have the directors approve his own appointment to manage the business of the international company, or may want to contract a licensed trustee company to carry out part of these functions.



It is common for a licensed trustee company to provide certain management services to private trustee companies, in the same way as licensed trustee companies provide management services for offshore banks and insurers. This means that the client will be able to get the benefit of the licensed trustee company’s experience (particularly relating to keeping proper records and following procedures as a trustee to ensure there is no room for argument as to a sham) while retaining overall control. A licensed trustee company will normally be able to give a fixed quote for providing these services.

Each private trustee company may act as a trustee for up to three international trusts. This creates an opportunity for professional advisers to form a private trustee company which they can then have administered for groups of their clients.

If a threat develops against the client, the client must be in a position where he cannot be forced to repatriate the assets of the trust. Cautious clients will not allow themselves to be in this position at any time, but the two shareholding structures described above are particularly suited to immediate transfer of any residual control without formality.

In the case of the default shares, the shares can be issued subject to terms that vest the shares of the private trustee company in a licensed trustee company in the event of any threat against the client.

In a similar situation with a purpose company, a cautious client can transfer the bearer debenture by simple delivery. If a change of jurisdiction is called for, then as an alternative to re-domiciling the trust by a change of trustee, the private trustee company itself may be re-domiciled.

The client must first form the international company in collaboration with a licensed trustee company, which appoints a resident secretary, provides the registered office for the international company, and often provides a director to attend to initial transactions.

The international company can then be appointed as the trustee of the client’s trust.

The trust is then registered, with the licensed trustee company also being appointed as the registered office of the trust. The licensed trustee company will attend to the filing of the annual return for the international company and the annual renewal of registration of both the international company and the trust.

No taxes are payable by either the private trustee company or the international trust of which it is appointed trustee.

A Cook Islands private trustee company structure has several advantages over similar structures in other offshore jurisdictions.

First, no Purpose Trust Required. In other jurisdictions the shares of a private trustee company must be held by a purpose trust to separate legal ownership by the client of the private trustee company. Although a purpose trust may be established in the Cook Islands, it is not necessary given the company structures available.


In other jurisdictions a local person must be appointed as a trustee in addition to the private trustee company, or as a director of the private trustee company.

These appointments add cost and give opportunity for disclosure. No such appointments are required in the Cook Islands.

In other jurisdictions the accounts of the private trustee company must be audited annually. In the Cook Islands the need for an audit can be dispensed with by a shareholders’ special resolution.

John is a successful businessman in his late 50s. Although he has no known creditors, he is interested in offshore asset protection because he is concerned about potential risk from a new business venture. He is also not confident in the ability of his heirs to avoid litigation. He therefore wants to establish an asset protection trust in an offshore jurisdiction to serve as a nest egg for his own retirement, and to hold further assets for his heirs. John started a high risk investment portfolio five years ago. He directs the investment personally and has seen its cash value grow substantially. This portfolio is the asset he wants to settle on the asset protection trust. He intends to continue trading in high risk investments, and directing trading himself.

John has spoken to several offshore trust companies. Because of their potential exposure for calls as well as the risk of action by beneficiaries in the event of loss of capital, they are unwilling to act as trustee if John expects the trust to invest in high risk investments. Even if John changes to more conservative funds, they are not comfortable with him in effect being the manager. They offer to manage the funds for John on a percentage of funds under management basis (one percent), but he is not comfortable with giving control to a company
outside the United States, run by people he has never done business with before, nor is he satisfied with the returns they offer.

John’s attorney, Louis, recommends that John form his own private trustee company. Louis gives instructions to the trust company to form an offshore company with no shares.

A bearer debenture is issued to Louis as the promoter of the offshore company, and she uses her powers under the debenture to appoint John as a director. The directors of the offshore company then pass resolutions authorizing the opening of trading accounts in the name of the offshore company as trustee, and approving the appointment of the offshore company as trustee of a trust to be settled by John.

Louis then prepares an asset protection trust in the form of trust he is accustomed to using. The licensed trust company will not impose any requirements as it is not acting as trustee, although the instrument will have special asset protection provisions dealing with items such as duress, change of trustee, and appointing a standby trustee.

The offshore company signs the trust as trustee, and the trust is sent to the licensed trustee company to register.

While John is in control of the offshore company, he must be careful to maintain its separate identity as a trustee to avoid any accusation that the structure is a sham. This requires John to maintain a certain level of administration, and he may wish to bring in another person in whom he has confidence to act as a director of the offshore company to promote this independent stance. The offshore company must keep separate minutes as trustee and must ensure that it enters into contracts in this capacity only. It will need to prepare its own accounts as well as separate accounts for the trust, and should prepare a formal report to the beneficiaries annually.

Louis reviews these records with John annually. In the event that John does come under threat of litigation at a later date, he can resign (or be removed by the debenture holder) as a director, and the bearer debenture can be delivered
by Louis to the licensed trustee company which would also appoint its own nominee as new director. Alternatively the international company could be removed and the licensed trustee company appointed as trustee.

Under Cook Islands law, the trust would have survived through the limitation of actions period and would then be protected from litigation.

A private trustee company formed in the Cook Islands can form a useful and inexpensive part of a client’s offshore structure, as well as provide a level of comfort for the client not prepared to surrender all control of his or her affairs to
an offshore trustee.

The structure is familiar to clients, easy to explain and understand, and has adequate safeguards in the event of a challenge to the trust assets.




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