¶ 1601
Overview
Scope of the chapter. This chapter examines the events that change who holds the rights in a Cook Islands limited liability company, that end a member's participation in it, and that end the company or move it to another legal system. It begins with the member's interest as property and the rules on its assignment (¶ 1610), and then turns to the events that change membership without a transfer by the member, namely death, incompetency and the dissolution of a member that is itself an entity (¶ 1620). It examines the member's power to resign, the absence of any statutory power to expel and the means by which the company may buy out a member (¶ 1630). The chapter then examines voluntary dissolution (¶ 1640), suspension, dissolution by operation of law and the Registrar's proceedings for involuntary dissolution, together with the absence of any remedy by which a member may obtain dissolution (¶ 1650), and the winding up that follows (¶ 1660). The last three parts address transactions that change the company's form or domicile: mergers, consolidations and sales of the business, for which the Act makes no provision (¶ 1670); transfer of domicile into and out of the Cook Islands, and conversion (¶ 1680); and, in outline, the United States tax consequences of these transactions, with a drafting checklist (¶ 1690).
The statutory text. The provisions examined are Parts V to VIII of the Limited Liability Companies Act 2008 (No. 7), sections 33 to 70, together with sections 16, 18, 19 and 22 on suspension and dissolution by operation of law and the amendments made by the Limited Liability Companies Amendment Act 2013 (No. 16). Limited Liability Companies Act 2008, §§ 16, 18–19, 22, 33–70 (Cook Is.); Limited Liability Companies Amendment Act 2013, § 7 (Cook Is.). The 2013 Act is the only amending Act. It did not touch the provisions on transfer, resignation or transfer of domicile, and its only change to Part VI was the addition of a ground of involuntary dissolution in section 56(1)(c), whose drafting is examined in chapter 12 (see supra ¶ 1260.09). Where a passage of the International Companies Act 1981–82 is used for comparison, it is cited from the consolidation published by the Financial Supervisory Commission in 2005. That consolidation was not checked for later amendments to the provisions cited.
What the Act contains and what it omits. The Act deals with these matters briefly. It provides that a member's interest is personal property that may be assigned in whole or in part, and that an assignor ceases to be a member on assigning any of its rights (§ 44). It gives a member a default right to resign by written notice and leaves the resigning member with its economic rights (§§ 37–38). It provides for dissolution by unanimous written agreement of the members and the managers, or on events stated in writing (§ 49), for winding up through a statement of intent to dissolve and articles of dissolution (§§ 49–55), for involuntary dissolution in an action by the Registrar (§ 56) and for dissolution by operation of law after a year of suspension (§ 19(5)). It permits a foreign LLC to move its domicile to the Cook Islands and a Cook Islands LLC to move away (Parts VII and VIII). The Act says nothing about a number of matters that most LLC statutes address:
- a merger or consolidation of an LLC with another LLC or with any other entity;
- the conversion of an LLC into another form of entity, or of another entity into an LLC;
- a power to expel a member, or a buyout or appraisal right on any event;
- a petition by a member for dissolution on the ground that the business cannot practicably be carried on, or on the just and equitable ground;
- a procedure for giving notice to creditors and barring late claims after dissolution;
- the restoration of a dissolved LLC to the register, or the fate of property left in an LLC dissolved by operation of law.
These omissions shape most of the practical advice in this chapter. Where the Act is silent, the operating agreement must supply the rule, and where the operating agreement cannot supply it, because the matter concerns the company's existence or its relation to the State, the planner must use the procedures the Act does provide or work around their absence.
Relation to other chapters. The formation of an LLC, its renewal, suspension and reinstatement, and the procedure for transfer of domicile into and out of the Cook Islands are examined in chapter 12 (see supra ¶¶ 1250, 1280). The rules on admission, classes of members and the managers' consent to dissolution are examined in chapter 13 (see supra ¶¶ 1330, 1360.03). The duties of managers on a winding up or a transfer of domicile are examined in chapter 14 (see supra ¶ 1470.06). The member's creditor's charging order under section 45, which governs what a creditor may and may not do with a member's interest, is examined in chapter 15 (see supra ch. 15). The revisions to the Act submitted to the Government in 2026 would change several rules examined here, including the treatment of an assignee, a change in control of a member and the expulsion of a member. Those revisions are proposals and not law. Where they bear on a point they are mentioned briefly and labelled as proposals; they are examined in full in chapter 17 (see infra ch. 17).
No reported decisions. No reported decision of the High Court or the Court of Appeal of the Cook Islands construing the provisions examined in this chapter has been identified. Civil proceedings under the Act are heard in camera, and decisions on its application or interpretation are published only in edited form. 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 from the decisions of courts in other jurisdictions on comparable words, which are persuasive only (see supra ¶ 1301.05).