¶ 1301
Overview
Scope of the chapter. This chapter examines the internal law of a Cook Islands limited liability company: who may be its members, who manages it, how its managers bind it, how decisions are taken, how money goes in and comes out, what records it must keep, what the members may learn about its affairs, and the agreement through which the members arrange these matters for themselves. The governing statute is the Limited Liability Companies Act 2008 (No. 7), assented to on 25 June 2008, as amended by the Limited Liability Companies Amendment Act 2013 (No. 16). The provisions examined here are found in sections 2, 6 to 8, 11, 17, 26 to 48 and 72 of the 2008 Act and in sections 4 to 6 of the 2013 Act. The Act is administered by the Financial Supervisory Commission, and every document lodged under it passes through a licensed trustee company (see supra ch. 4; infra ch. 12).
Relation to other chapters. Chapter 12 examines the formation of the company, its articles of organisation, the registered agent, the annual renewal of its certificate and the registration of foreign LLCs (see infra ch. 12). The duties of managers are introduced in this chapter only so far as they bear on the allocation of management, and the full treatment of fiduciary duties, exculpation and indemnification is left to chapter 14. The rights of a member's creditors under section 45 are examined in chapter 15, and the transfer of interests, resignation, dissolution and transfer of domicile in chapter 16. The proposed revisions to the Act submitted to the Government in 2026, several of which would change the rules examined in this chapter, are examined in chapter 17. A form of operating agreement for single-member and multi-member companies is set out in Appendix B.
The statutory method. The Act follows the American LLC statutes of the 1990s in treating the operating agreement as the primary source of the company's internal law. Section 8(1) provides that the operating agreement "shall govern the rights, duties, limitations, qualifications, and relations among the managers, the members, the members' assignees and transferees, and the limited liability company," and that its provisions "shall prevail over any provision of this Act to the contrary" except for the provisions listed in section 8(2). Limited Liability Companies Act 2008, § 8(1) (Cook Is.). Most of the rules examined in this chapter are therefore default rules, which apply only where the agreement says nothing. A short list of provisions cannot be displaced, and those provisions, together with the requirements of writing in section 8(3), mark the outer limit of the members' freedom (see infra ¶ 1320).
The usual structure. Almost every Cook Islands LLC is formed for a person who lives outside the Cook Islands, and most are owned by a Cook Islands international trust. The trust holds all of the membership interests, a licensed trustee company acts as registered agent and frequently as manager, and the company holds a bank or brokerage account outside the Cook Islands. Limited Liability Companies Act 2008, §§ 5, 11(1)–(2), 18(1) (Cook Is.); see Lighthouse on Limited Liability Companies ch. 54, ¶ 5440.04 (2026). The members and managers of such a company are few, and the questions that occupy the courts of Delaware, where LLCs are used for joint ventures among unrelated investors, arise less often. The questions that matter most for a trust-owned company concern who holds the power to manage it, who may change the operating agreement, what happens when a member's creditor or a foreign court seeks to direct the company, and whether the records the Act requires are kept. This chapter gives those questions the most attention.
No reported decisions. No reported decision of the High Court or the Court of Appeal of the Cook Islands construing the provisions of the 2008 Act examined in this chapter has been identified, and few should be expected. Section 72(1) requires civil proceedings under the Act to be heard in camera, and section 72(2) requires the Court's decisions on the application or interpretation of the Act to be published only after editing to preserve the confidentiality of the company and its members and managers. Limited Liability Companies Act 2008, § 72(1)–(2) (Cook Is.). The provisions are therefore examined from their text, from the American statutes on which they were modelled and, where the text is the same, from the decisions of American courts on those statutes. Those decisions are persuasive only. A Cook Islands court would decide a question of construction under the Act by the methods described in chapter 2 (see supra ch. 2).
Terminology. The Act calls the company's constituent document filed with the Registrar its "articles of organisation" and the members' agreement its "operating agreement." Limited Liability Companies Act 2008, § 2 (Cook Is.). A member's economic rights are its "membership interest," defined as "a member's share of the profits and losses of a limited liability company and the right to receive distributions of the limited liability company's assets," while "membership rights" means "all of the rights of a member in a company including membership interest, voting rights and any other right or interest arising from or incidental to being a member." Id. The distinction matters throughout the Act: a charging order reaches only the membership interest, while a transfer under section 44 may carry the whole of the membership rights (see infra ¶ 1330.07; ch. 15). A "manager" is "the person or persons entitled to manage a limited liability company pursuant to section 26." Id. The Act uses "assignee" and "transferee" without defining either term.