¶ 1701
Overview
Scope of the chapter. The Cook Islands LLC is rarely used on its own. In the usual structure its membership interests are held by the trustee of a Cook Islands international trust, its manager is a licensed trustee company, its assets are held in a third country and its members and beneficiaries live elsewhere, most often in the United States. This chapter examines the LLC in that setting. It considers why the LLC is used beneath an international trust and what each component of the structure contributes; how courts outside the Cook Islands, and American courts in particular, treat the members, the managers and the membership interest of a Cook Islands LLC; how the LLC is classified for United States federal tax purposes and what reporting follows; and the amendments to the Limited Liability Companies Act 2008 that a committee of practitioners submitted to the Cook Islands government in 2026.
Relation to other chapters. The Act, its formation provisions and the Registrar are examined in chapter 12 (see supra ch. 12); management, members and the operating agreement in chapter 13 (see supra ch. 13); the duties of managers in chapter 14 (see supra ch. 14); the charging order in chapter 15 (see supra ch. 15); and transfers, dissolution and transfer of domicile in chapter 16 (see supra ch. 16). The international trust that usually owns the LLC is examined in Part II (see supra chs. 5–11), and the fraudulent-disposition rule of section 13B of the International Trusts Act 1984 in chapter 21 (see infra ch. 21). The reception of Cook Islands structures in American courts is examined at greater length in chapter 25 (see infra ch. 25), and the United States tax and reporting rules in chapter 29 (see infra ch. 29). Cook Islands taxation of LLCs, including the effect of section 76 of the Act, is examined in chapter 26 (see infra ch. 26). The companion volume Lighthouse on Limited Liability Companies examines the Cook Islands, Nevis, Belize and Marshall Islands LLC statutes together in its chapter 54 and is the fuller source for the comparative points made here.
The proposal and the law. Part of this chapter describes amendments that have been proposed but not enacted. A committee of practitioners prepared a set of amendments to the Limited Liability Companies Act 2008 and submitted them to the Cook Islands government on April 1, 2026. Proposal as to Changes to LLC Legislation (2026) (Cook Is.) (committee proposal submitted Apr. 1, 2026) (hereinafter Cook Islands Proposal). The proposal is pending before Parliament. None of the amendments has been enacted. Until a bill is passed and comes into force, a Cook Islands LLC is governed by the 2008 Act as amended in 2013, and every statement in this book about what the law of the Cook Islands now provides refers to that Act. Paragraphs 1750 to 1780 describe the proposal section by section, and each reference to a proposed section is marked as a proposal.
Plan of the chapter. The chapter proceeds as follows:
- the LLC in Cook Islands structures (¶ 1710);
- management, control and the reach of foreign courts (¶ 1720);
- the governing law and situs of the membership interest before foreign courts (¶ 1730);
- United States entity classification and reporting (¶ 1740);
- the 2026 committee proposal: its status and how this chapter treats it (¶ 1750);
- the proposed definitions, operating agreement, protectors and governing-law provision (¶ 1760);
- the proposed provisions on compelled instructions, allocations, certificates, assignment, expulsion and series (¶ 1770);
- the proposed fraudulent-transfer rule for LLCs (¶ 1780); and
- planning under the present Act, model provisions and a checklist (¶ 1790).
Terms. In this chapter "the Act" means the Limited Liability Companies Act 2008 (No. 7) as amended by the Limited Liability Companies Amendment Act 2013 (No. 16). "The International Trusts Act" means the International Trusts Act 1984 as amended. "The proposal" and "the Cook Islands Proposal" mean the committee proposal described in ¶ 1701.03. A "proposed section" is a section the proposal would add to or substitute in the Act; it is not law. "American court" means a federal or state court of the United States.