Lighthouse
Lighthouse on the Cook Islands: International Trusts, LLCs, and Foundations

Detailed Contents

This table lists every chapter, section and subsection of Lighthouse on the Cook Islands: International Trusts, LLCs, and Foundations with its paragraph (¶) number. Each entry links to its place in the text.

Chapter 1The Cook Islands as a Financial Center: Self-Government in Free Association with New Zealand and the Growth of the International Sector

  1. ¶ 101Overview
    1. 101.01Scope of the chapter
    2. 101.02The constitutional basis of the statutes
    3. 101.03Five statutes, one registry
    4. 101.04Why the frame matters
    5. 101.05A legislature that responds
    6. 101.06A note on sources
    7. 101.07The plan of the chapter
  2. ¶ 110From New Zealand Administration to Free Association
    1. 110.01The islands
    2. 110.02New Zealand administration
    3. 110.03The Constitution Act 1964
    4. 110.04The four operative sections
    5. 110.05Free association
    6. 110.06What free association means for the statutes
    7. 110.07Changes in the institutions since 1965
  3. ¶ 120The Constitution: Head of State, Executive, Parliament and Amendment
    1. 120.01Structure of the Constitution
    2. 120.02The Head of State and the Queen's Representative
    3. 120.03Cabinet and the Executive Council
    4. 120.04The House of Arikis
    5. 120.05Parliament
    6. 120.06Amendment of the Constitution
    7. 120.07Fundamental rights and the protective statutes
    8. 120.08Supremacy of the Constitution
  4. ¶ 130Making Cook Islands Law: Acts, Assent, Commencement, Extraterritorial Reach and Existing Law
    1. 130.01The power to make laws
    2. 130.02Bills and assent
    3. 130.03Commencement
    4. 130.04Extraterritorial operation
    5. 130.05New Zealand legislation
    6. 130.06Existing law
    7. 130.07Publication and citation
  5. ¶ 140The Growth of the International Statutes, 1981–2026
    1. 140.01The first package: 1981–82
    2. 140.02The International Trusts Act 1984
    3. 140.03The 1989 amendments
    4. 140.04Amendments from 1991 to 2013
    5. 140.05The Orange Grove case and the legislative response
    6. 140.06The Financial Supervisory Commission Act 2003
    7. 140.07The Limited Liability Companies Act 2008
    8. 140.08The Foundations Act 2012
    9. 140.09The Trustee Companies Act 2014
    10. 140.10Removal of the international company tax exemption, 2019
    11. 140.11International relationship property trusts, 2021
    12. 140.12Proposed revisions to the LLC Act
  6. ¶ 150The Institutions
    1. 150.01Four functions
    2. 150.02The Financial Supervisory Commission
    3. 150.03The registry
    4. 150.04The trustee companies
    5. 150.05The High Court
    6. 150.06The Court of Appeal
    7. 150.07The Privy Council
    8. 150.08The Financial Intelligence Unit and the tax administration
  7. ¶ 160The Cook Islands in Comparative Perspective
    1. 160.01The peer jurisdictions
    2. 160.02Political status
    3. 160.03The trust statutes
    4. 160.04The LLC statutes
    5. 160.05The foundation statutes
    6. 160.06The courts
  8. ¶ 170International Standards and Information Exchange
    1. 170.01Why standards matter to the planner
    2. 170.02The FATF list, 2000–2005
    3. 170.03The 2018 mutual evaluation
    4. 170.04The OECD and harmful tax practices
    5. 170.05Automatic exchange and the Global Forum
    6. 170.06Confidentiality and transparency together
  9. ¶ 180Choosing the Cook Islands: Practitioner Considerations and Risks
    1. 180.01What the jurisdiction offers
    2. 180.02The test of the record
    3. 180.03Practical disadvantages
    4. 180.04Constitutional and political risk
    5. 180.05When the Cook Islands is the wrong choice
  10. ¶ 190Plan of the Treatise and How to Use It
    1. 190.01Seven Parts
    2. 190.02Paragraph numbering
    3. 190.03Cross-references across the series
    4. 190.04Examples, Planning Notes, Comments and case discussions
    5. 190.05Statements of law and proposals
    6. 190.06The readers

Chapter 2Sources of Law: Acts of Parliament, New Zealand Law, the Common Law and English Authority

  1. ¶ 201Overview
    1. 201.01Scope of the chapter
    2. 201.02Why the sources matter to the planner
    3. 201.03The sources in brief
    4. 201.04A source that was lost and restored
    5. 201.05Organization
    6. 201.06Relationship to other chapters
  2. ¶ 210The Hierarchy of Cook Islands Law
    1. 210.01The order of the sources
    2. 210.02Acts and other law
    3. 210.03The Constitution and Acts
    4. 210.04Received law is subordinate
    5. 210.05Decided cases
    6. 210.06Reading the table
  3. ¶ 220The Constitution as Supreme Law and the Existing-Law Clause
    1. 220.01A constitution enacted by another Parliament
    2. 220.02What supremacy means
    3. 220.03Amendment and entrenchment
    4. 220.04The existing-law clause
    5. 220.05Ordinances of the earlier legislatures
    6. 220.06New Zealand Acts in force before 1981
    7. 220.07Rights and liabilities under the existing law
  4. ¶ 230Acts of Parliament, Ordinances and Subsidiary Legislation
    1. 230.01Acts of the Cook Islands Parliament
    2. 230.02Principal Acts and amending Acts
    3. 230.03Subsidiary legislation
    4. 230.04Ordinances and bylaws
    5. 230.05Reading a Cook Islands Act
    6. 230.06International conventions
  5. ¶ 240New Zealand Law: The Cook Islands Act 1915, Adopted Acts and Article 46
    1. 240.01Four channels
    2. 240.02The Cook Islands Act 1915
    3. 240.03Parts still in force
    4. 240.04Two versions of the 1915 Act
    5. 240.05New Zealand Acts extended before 1981
    6. 240.06New Zealand Acts adopted by Cook Islands Acts
    7. 240.07An adopted Act stands still
    8. 240.08New Zealand judgments
  6. ¶ 250English Law: Section 615, Its Repeal in 2019 and Re-enactment in 2020
    1. 250.01The reception provision
    2. 250.02The four conditions
    3. 250.03The repeal of 2019
    4. 250.04The re-enactment of 2020
    5. 250.05Which English law?
    6. 250.06English statutes held to apply
    7. 250.07Common law, equity and section 616
    8. 250.08The international statutes and the 1840 law
  7. ¶ 260How the International Statutes Displace and Choose the Law
    1. 260.01Three techniques
    2. 260.02Preservation: section 3
    3. 260.03Validation: section 5
    4. 260.04Displacement of received rules
    5. 260.05Control of other enactments
    6. 260.06Choice of law
    7. 260.07The LLC and foundation statutes
  8. ¶ 270Precedent and Persuasive Authority
    1. 270.01The hierarchy of courts
    2. 270.02The Privy Council
    3. 270.03Persuasive authority
    4. 270.04A Cook Islands common law
    5. 270.05Webb v. Webb
    6. 270.06Law reports and neutral citations
  9. ¶ 280Custom and Customary Law
    1. 280.01Recognition before 1995
    2. 280.02Article 66A
    3. 280.03Custom in the hierarchy
    4. 280.04International structures and land in the islands
  10. ¶ 290Researching and Citing Cook Islands Law
    1. 290.01No single authoritative consolidation
    2. 290.02Where to find the texts
    3. 290.03Verifying the text at a date
    4. 290.04Citation practice
    5. 290.05Checklist

Chapter 3The Courts: The High Court, the Court of Appeal and the Privy Council

  1. ¶ 301Overview
    1. 301.01Scope of the chapter
    2. 301.02Why the courts matter to the planner
    3. 301.03Three courts, one Constitution
    4. 301.04Plan of the chapter
    5. 301.05Relation to later chapters
  2. ¶ 310The Judiciary under Part IV of the Constitution
    1. 310.01Before 1965
    2. 310.02The structure of Part IV
    3. 310.03Qualifications of judges
    4. 310.04Appointment
    5. 310.05Tenure
    6. 310.06Removal and salary
    7. 310.07Justices of the Peace
    8. 310.08The oaths
  3. ¶ 320The High Court
    1. 320.01A court of general jurisdiction
    2. 320.02The three Divisions
    3. 320.03Flexibility of the bench
    4. 320.04Practice and procedure
    5. 320.05The inherent jurisdiction over trusts
    6. 320.06Equitable relief
    7. 320.07Security for costs
    8. 320.08Applications for directions and confidentiality
  4. ¶ 330The Court of Appeal
    1. 330.01Establishment
    2. 330.02Composition
    3. 330.03Quorum and judgment
    4. 330.04Judges not to sit on their own decisions
    5. 330.05Jurisdiction
    6. 330.06The value threshold in trust litigation
    7. 330.07Finality
    8. 330.08Sittings by video link
  5. ¶ 340The Privy Council
    1. 340.01The constitutional right of appeal
    2. 340.02The Privy Council (Judicial Committee) Act 1984
    3. 340.03The cases in which an appeal lies
    4. 340.04Civil cases only
    5. 340.05Independence from New Zealand's choice
    6. 340.06The Privy Council in practice
  6. ¶ 350Trust Litigation in the High Court: Procedure under the International Trusts Act
    1. 350.01The High Court as the exclusive forum
    2. 350.02Commencement and the affidavit
    3. 350.03The standard of proof and the onus
    4. 350.04Interlocutory relief
    5. 350.05Time
    6. 350.06Conditions on the claim
    7. 350.07What a successful creditor obtains
    8. 350.08Discovery, privilege and confidentiality
  7. ¶ 360The Leading Cases
    1. 360.01The record
    2. 360.02Pacific Heritage Bank v. Radke
    3. 360.03Riechers: a spouse's Mareva injunction
    4. 360.04The Anderson litigation
    5. 360.05A v. B and E v. A: discovery and privilege
    6. 360.06What the cases show about the courts
    7. 360.07Duration
  8. ¶ 370Foreign Judgments, Foreign Courts and Cross-Border Assistance
    1. 370.01Two kinds of foreign judgment
    2. 370.02Section 13D
    3. 370.03New Zealand judgments: section 173
    4. 370.04Foreign revenue and penal claims
    5. 370.05Foreign bankruptcy
    6. 370.06Criminal matters and mutual assistance
    7. 370.07Foreign subpoenas and requests for evidence
  9. ¶ 380Judges, Counsel and Practice
    1. 380.01A bench drawn from New Zealand
    2. 380.02The law the courts apply
    3. 380.03Counsel
    4. 380.04Publication and anonymity
    5. 380.05Costs
    6. 380.06Time and distance
  10. ¶ 390Planning Implications
    1. 390.01The courts as part of the structure
    2. 390.02Explaining the courts to the client
    3. 390.03Preparing the trustee
    4. 390.04Drafting for the courts
    5. 390.05Using the appellate structure
    6. 390.06Settlor powers and the courts
    7. 390.07Foreign revenue claims
    8. 390.08Checklist

Chapter 4Regulation: The Financial Supervisory Commission, Trustee Companies and the Registrar

  1. ¶ 401Overview
    1. 401.01Scope of the chapter
    2. 401.02Why regulation matters to the planner
    3. 401.03The statutes
    4. 401.04The trustee company as gatekeeper
    5. 401.05Plan of the chapter
  2. ¶ 410The Financial Supervisory Commission: Establishment and Governance
    1. 410.01Predecessors
    2. 410.02Enactment and establishment
    3. 410.03The Board
    4. 410.04The Commissioner and the registrars
    5. 410.05The enactments administered
    6. 410.06Funding and accountability
    7. 410.07Membership of international bodies
  3. ¶ 420The Commission's Duties, Functions and Powers
    1. 420.01The statutory duty
    2. 420.02Functions
    3. 420.03The compliance officer
    4. 420.04Inspection and directions
    5. 420.05Compulsory disclosure of information
    6. 420.06The Commission's power prevails over statutory secrecy
    7. 420.07Confidentiality within the Commission
    8. 420.08Assistance to overseas regulators
    9. 420.09Limits of regulatory cooperation
  4. ¶ 430Trustee Company Business and Licensing
    1. 430.01The 2014 Act
    2. 430.02Trustee company business defined
    3. 430.03Exceptions
    4. 430.04The prohibition
    5. 430.05Contracts made without a licence
    6. 430.06Who may apply
    7. 430.07Information and reports
    8. 430.08The fit and proper test
    9. 430.09Other grounds of refusal
    10. 430.10Time for decision
    11. 430.11Duration, conditions and revocation
    12. 430.12Transition from the 1981–82 Act
    13. 430.13Subsidiaries, delegation and managed trustee companies
  5. ¶ 440Supervision of Trustee Companies: Controllers, Directions and Intervention
    1. 440.01Key persons
    2. 440.02Approval of key persons
    3. 440.03Objection to a key person
    4. 440.04Shareholder controllers
    5. 440.05Court-ordered sale of shares
    6. 440.06Directions
    7. 440.07Intervention grounds
    8. 440.08Public statements
    9. 440.09Intervention orders
    10. 440.10Winding up
  6. ¶ 450Prudential Rules, Information, Investigations, Offences and Recourse
    1. 450.01The regulations
    2. 450.02Client money
    3. 450.03Audit and compliance declarations
    4. 450.04Capital and insurance
    5. 450.05Settlor due diligence
    6. 450.06Information and warrants
    7. 450.07Investigations
    8. 450.08Privilege and the protection of informants
    9. 450.09Offences
    10. 450.10Recourse to the High Court
  7. ¶ 460The Trustee Company as Trustee
    1. 460.01Capacity to act
    2. 460.02The trustee company as sole trustee
    3. 460.03Liability when acting jointly
    4. 460.04Delegation to a trustee company
    5. 460.05Release and indemnity by a beneficiary
    6. 460.06Resignation on deregistration
    7. 460.07False information in an application
    8. 460.08Compelled resignation
    9. 460.09Consequences for the client
    10. 460.10Protection of officers and employees
  8. ¶ 470The Registrar and the International Registry
    1. 470.01One Registrar, five registers
    2. 470.02The online registry
    3. 470.03Registration through a trustee company
    4. 470.04International trust fees
    5. 470.05Renewal and deregistration of international trusts
    6. 470.06Transfer to another trustee company
    7. 470.07Access to registry information
    8. 470.08What the register does not hold
    9. 470.09Names and certificates
    10. 470.10Registry statistics
    11. 470.11Bearer instruments
  9. ¶ 480Anti-Money Laundering, the Financial Intelligence Unit and International Reviews
    1. 480.01The legislation
    2. 480.02The Financial Intelligence Unit
    3. 480.03Obligations of trustee companies
    4. 480.04Beneficial ownership
    5. 480.05The FATF and the OECD, 2000–2005
    6. 480.06The 2018 mutual evaluation
    7. 480.07Why the reviews matter to clients
    8. 480.08Foreign authorities and the trustee company
  10. ¶ 490Practitioner Considerations: Choosing and Monitoring a Trustee Company
    1. 490.01The licence
    2. 490.02Ownership and control
    3. 490.03Capacity and resources
    4. 490.04The trustee company's own exposure
    5. 490.05Fees, renewals and client money
    6. 490.06The industry's voice in reform
    7. 490.07Changing trustee company
    8. 490.08Checklist

Part II: International Trusts

Chapter 5The International Trusts Act 1984: Scope, History, Amendments and Registration

  1. ¶ 501Overview
    1. 501.01Scope of the chapter
    2. 501.02Why the history matters
    3. 501.03Sources
    4. 501.04Plan of the chapter
  2. ¶ 510Origins of the 1984 Act
    1. 510.01The international sector legislation
    2. 510.02Administration
    3. 510.03The trust law received
    4. 510.04The design of the 1984 Act
    5. 510.05From facilitation to protection
  3. ¶ 520The Act as Enacted in 1984
    1. 520.01Structure
    2. 520.02Definitions
    3. 520.03Validity notwithstanding foreign law
    4. 520.04Perpetuities and accumulations
    5. 520.05Saunders v. Vautier
    6. 520.06Revocation and creditors
    7. 520.07Charitable and purpose trusts
    8. 520.08Investments
    9. 520.09Registration
    10. 520.10Application of other Acts
    11. 520.11Miscellaneous provisions
  4. ¶ 530The 1989 Amendments: The Protective Core
    1. 530.01The International Trusts Amendment Act 1989
    2. 530.02Which trusts it governed
    3. 530.03New definitions
    4. 530.04Revocation and bankruptcy: sections 11 and 13A
    5. 530.05Fraud: section 13B as first enacted
    6. 530.06Sections 13C to 13I
    7. 530.07Registration
    8. 530.08Application of other Acts, residence and the Crown guarantee
    9. 530.09The International Trusts Amendment (No. 2) Act 1989
  5. ¶ 540The 1991 Amendment and the Orange Grove Litigation
    1. 540.01The International Trusts Amendment Act 1991
    2. 540.02Section 13B(8)–(10), section 13H(3) and section 13J
    3. 540.03Section 13K and the Statute of Elizabeth
    4. 540.04Radke: the one-year rule applied
    5. 540.05Orange Grove
  6. ¶ 550The 1995–96 Amendment Act
    1. 550.01Scope of the 1995–96 Act
    2. 550.02Definitions
    3. 550.03Perpetuities, execution and purpose trusts
    4. 550.04Section 13B after Orange Grove
    5. 550.05Foreign judgments: section 13D replaced
    6. 550.06Governing law
    7. 550.07Section 13K tightened
    8. 550.08Registration, title and trustees
    9. 550.09Protectors, secrecy and other enactments
    10. 550.10Transitional and application provisions
    11. 550.11The two-year window to vary instruments
  7. ¶ 560The 1999, 2004 and 2013 Amendments and Later Changes
    1. 560.01The International Trusts Amendment Act 1999
    2. 560.02Saunders v. Vautier extended
    3. 560.03Punitive damages and migration
    4. 560.04Registration, custodians and protectors
    5. 560.05Privacy, exemption and trust records
    6. 560.06The International Trusts Amendment Act 2004
    7. 560.07The 2013 Act and the Schedule
    8. 560.08The International Relationship Property Trusts Act 2021
    9. 560.09Summary of the amending Acts
  8. ¶ 570Scope: What Is an International Trust
    1. 570.01The definition as amended
    2. 570.02Registration
    3. 570.03The Cook Islands trustee
    4. 570.04Non-resident beneficiaries
    5. 570.05Trusts governed by foreign law
    6. 570.06Testamentary trusts and powers
    7. 570.07What the Act does not cover
  9. ¶ 580Registration and Its Consequences
    1. 580.01The registration cycle
    2. 580.02Application
    3. 580.03Registration and its effective date
    4. 580.04Renewal
    5. 580.05Deregistration and its consequences
    6. 580.06Fees
    7. 580.07Registered office, trust instrument and proceedings
    8. 580.08The register is not public
    9. 580.09Records
  10. ¶ 590Reading the Act and Planning Points
    1. 590.01Building a working text
    2. 590.02Which version governs a trust
    3. 590.03The Act in the rest of this book
    4. 590.04Checklist

Chapter 6Creating an International Trust: Settlors, Capacity, Formalities, Governing Law and Validity

  1. ¶ 601Overview
    1. 601.01Scope of the chapter
    2. 601.02Two layers of law
    3. 601.03Why creation matters
    4. 601.04Organization
  2. ¶ 610The International Trust and the General Law of Trusts
    1. 610.01The general law preserved
    2. 610.02The definition of international trust
    3. 610.03Non-resident beneficiaries
    4. 610.04The qualifying trustee
    5. 610.05Domestic Cook Islands trusts
    6. 610.06Other statutory trusts
  3. ¶ 620The Settlor
    1. 620.01The statutory definition
    2. 620.02Nominal and nominee settlors
    3. 620.03Multiple settlors and spouses
    4. 620.04The settlor as trustee, protector or beneficiary
    5. 620.05Due diligence on the settlor
    6. 620.06Additions to the trust
  4. ¶ 630Capacity
    1. 630.01The question
    2. 630.02Cook Islands law governs
    3. 630.03Corporate settlors
    4. 630.04Capacity not to be questioned
    5. 630.05Special formalities for minors, the infirm and corporations
    6. 630.06Attorneys and other representatives
  5. ¶ 640Formalities: The Trust Instrument and the Transfer of Assets
    1. 640.01The trust instrument
    2. 640.02Execution in counterparts and in different places
    3. 640.03Constitution of the trust
    4. 640.04Transfers of assets outside the Cook Islands
    5. 640.05Foreign formalities
    6. 640.06Foreign land and testamentary trusts
    7. 640.07The trust's name and title to property
  6. ¶ 650Registration as the Gateway
    1. 650.01The application
    2. 650.02Registration operates from settlement
    3. 650.03The interval before registration
    4. 650.04Keeping the registration
  7. ¶ 660Governing Law
    1. 660.01Why the governing law matters
    2. 660.02How the governing law is determined
    3. 660.03An express choice is conclusive
    4. 660.04Choosing Cook Islands law for particular aspects
    5. 660.05Matters determined by Cook Islands law
    6. 660.06Exclusion of foreign law
    7. 660.07A validating rule
    8. 660.08Change of governing law
    9. 660.09The Hague Trusts Convention
  8. ¶ 670Validity Under Cook Islands Law
    1. 670.01The grounds of invalidity
    2. 670.02Irrevocability
    3. 670.03Retained powers and benefits
    4. 670.04Perpetuities and accumulations
    5. 670.05Heirship and personal relationships
    6. 670.06Objective nullity and section 13C
    7. 670.07Sham
  9. ¶ 680Validity Abroad: The Cook Islands Trust in Foreign Courts
    1. 680.01Two forums
    2. 680.02The Restatement rule
    3. 680.03The self-settled trust cases
    4. 680.04Nominal settlors in foreign courts
    5. 680.05Retained powers in foreign courts
    6. 680.06Spouses and matrimonial courts
    7. 680.07What the planner can achieve
  10. ¶ 690Planning and Drafting
    1. 690.01The deed as evidence
    2. 690.02Governing law and forum
    3. 690.03The settlor's declarations and execution
    4. 690.04Beneficiaries and residence
    5. 690.05The settlor's powers
    6. 690.06Checklist for the creation of an international trust

Chapter 7Trustees: Licensed Trustee Companies, Powers, Duties, Liability and Removal

  1. ¶ 701Overview
    1. 701.01Scope of the chapter
    2. 701.02What this chapter does not repeat
    3. 701.03The three layers of trustee law
    4. 701.04Why the trustee matters to the planner
    5. 701.05Terminology
  2. ¶ 710Who May Act as Trustee
    1. 710.01The qualifying trustee
    2. 710.02Trustee companies
    3. 710.03International companies and registered foreign companies
    4. 710.04Foreign co-trustees
    5. 710.05Individuals
    6. 710.06The settlor as trustee
    7. 710.07Non-residence of trustees
    8. 710.08Number of trustees
    9. 710.09Registered office and register
    10. 710.10Proceedings by or against the trust
  3. ¶ 720Appointment, Acceptance and Vesting
    1. 720.01The first trustees
    2. 720.02Registration after appointment
    3. 720.03Losing the qualifying trustee
    4. 720.04New and additional trustees under the deed
    5. 720.05The statutory power of appointment
    6. 720.06The reference to New Zealand
    7. 720.07Vesting the property in the new trustees
    8. 720.08Title in the name of the trust
    9. 720.09Title held by fewer than all the trustees
  4. ¶ 730The Sources of Trustee Law
    1. 730.01The saving of the general law
    2. 730.02Equity and the case law
    3. 730.03The Trustee Act 1956
    4. 730.04Provisions displaced for international trusts
    5. 730.05Later New Zealand law
    6. 730.06Part IIIA
    7. 730.07The governing law of the trustee's office
    8. 730.08The regulatory overlay
    9. 730.09The order of application
  5. ¶ 740The Standard of Care, Loyalty and Impartiality
    1. 740.01The prudent person of business
    2. 740.02The professional trustee
    3. 740.03The instrument's control of the standard
    4. 740.04Loyalty: no conflict and no profit
    5. 740.05Clauses permitting conflicts
    6. 740.06Impartiality
    7. 740.07Considering the exercise of discretions
    8. 740.08Unanimity and majority
    9. 740.09Letters of wishes
  6. ¶ 750Powers: Investment, Delegation, Custodian Trustees and Advisors
    1. 750.01Where the powers come from
    2. 750.02Investment
    3. 750.03The duty that accompanies the power
    4. 750.04Delegation under the instrument
    5. 750.05Default delegation to professionals
    6. 750.06The good-faith standard for delegation
    7. 750.07Delegation by power of attorney
    8. 750.08Custodian trustees
    9. 750.09The custodian's other powers
    10. 750.10Uses of the custodian structure
    11. 750.11Advisors
  7. ¶ 760Records, Information, Privacy and Directions
    1. 760.01The duty to account
    2. 760.02Statutory trust records
    3. 760.03Records of assets used by beneficiaries
    4. 760.04Beneficiaries' access to information
    5. 760.05The privacy offence
    6. 760.06Disclosure in the course of administration
    7. 760.07Foreign subpoenas and orders
    8. 760.08Statutory disclosure
    9. 760.09The right to apply for directions
    10. 760.10Directions in the face of a foreign claim
  8. ¶ 770Liability, Exoneration and Relief
    1. 770.01Liability for breach of trust
    2. 770.02Clauses limiting liability
    3. 770.03The limits of exoneration under the general law
    4. 770.04Gross negligence
    5. 770.05Releases and consents by beneficiaries
    6. 770.06The Court's power to relieve
    7. 770.07Impounding a beneficiary's interest
    8. 770.08The trustee's indemnity and lien
    9. 770.09Protection of the trust property from the trustee's creditors
    10. 770.10Protection of third parties
  9. ¶ 780The Trustee Under Pressure
    1. 780.01The four kinds of pressure
    2. 780.02Cook Islands law governs the trustee's response
    3. 780.03Duress provisions are contractual
    4. 780.04Receiving an instruction under compulsion
    5. 780.05What the trustee's refusal does and does not achieve
    6. 780.06Distributions while a claim is pending
    7. 780.07The trustee company's own exposure
    8. 780.08Claims against the trustee in the Cook Islands
  10. ¶ 790Retirement, Removal and Replacement
    1. 790.01Why the trustee may need to change
    2. 790.02Retirement under the deed
    3. 790.03Retirement under the Trustee Act
    4. 790.04Resignation on deregistration
    5. 790.05Compelled resignation
    6. 790.06Removal under the deed
    7. 790.07Removal and appointment by the Court
    8. 790.08Duties of the outgoing trustee
    9. 790.09The regulator and a failing trustee company
    10. 790.10Choosing and monitoring the trustee company
    11. 790.11Practitioner's checklist

Chapter 8Beneficiaries and Their Interests: Discretionary, Protective and Spendthrift Trusts

  1. ¶ 801Overview
    1. 801.01Scope of the chapter
    2. 801.02Relation to other chapters
    3. 801.03Why the beneficial provisions matter
    4. 801.04Sources
    5. 801.05Terminology
  2. ¶ 810Who May Be a Beneficiary
    1. 810.01The non-residence requirement
    2. 810.02Section 22 and the resident beneficiary
    3. 810.03Entities as beneficiaries
    4. 810.04Classes and certainty of objects
    5. 810.05The settlor as beneficiary
    6. 810.06The trustee and the protector as beneficiaries
    7. 810.07Adding and removing beneficiaries
  3. ¶ 820The Nature of Beneficial Interests
    1. 820.01Fixed interests
    2. 820.02Contingent and defeasible interests
    3. 820.03Discretionary objects
    4. 820.04The rule in Saunders v. Vautier and section 10
    5. 820.05Accumulation and duration
    6. 820.06Statutory powers of maintenance and advancement
  4. ¶ 830Discretionary Trusts
    1. 830.01Structure
    2. 830.02Why the discretionary trust protects
    3. 830.03Exercise of the discretion
    4. 830.04Letters of wishes
    5. 830.05The settlor as discretionary object
    6. 830.06Webb v. Webb
    7. 830.07Webb and the international trust
  5. ¶ 840Spendthrift Provisions under Section 13F
    1. 840.01The statutory text
    2. 840.02History and application
    3. 840.03What the section authorises
    4. 840.04Income
    5. 840.05Removal of the restriction
    6. 840.06Spendthrift restrictions for the settlor
    7. 840.07Limits of the section
  6. ¶ 850Protective Trusts and Forfeiture Clauses
    1. 850.01Origins
    2. 850.02The statutory text
    3. 850.03How the statutory trust operates
    4. 850.04The limits of section 42
    5. 850.05Protective trusts and section 13F compared
    6. 850.06Express forfeiture clauses
    7. 850.07Reinstatement
  7. ¶ 860Beneficiaries' Rights: Information, Accounts, Representation and Supervision
    1. 860.01The irreducible core
    2. 860.02Information and accounts
    3. 860.03The privacy provision
    4. 860.04Records
    5. 860.05Representation of beneficiaries
    6. 860.06Applications to the court
    7. 860.07The protector and the beneficiaries
  8. ¶ 870Beneficiaries and Claimants
    1. 870.01The beneficiary's creditors
    2. 870.02Foreign judgments against beneficiaries
    3. 870.03Bankruptcy of a beneficiary
    4. 870.04Personal relationships and heirship
    5. 870.05Foreign law that defeats the trust
    6. 870.06Community property
    7. 870.07Spouses of beneficiaries
    8. 870.08Revenue authorities and criminal process
  9. ¶ 880Drafting the Beneficial Provisions
    1. 880.01Approach
    2. 880.02Excluded persons
    3. 880.03Discretionary trusts
    4. 880.04Spendthrift restriction
    5. 880.05Protective trusts
    6. 880.06Representation of beneficiaries
    7. 880.07Information
  10. ¶ 890Planning Checklist
    1. 890.01Using the checklist
    2. 890.02Checklist

Chapter 9Protectors, Reserved Powers, Settlor Benefit and Duress Provisions

  1. ¶ 901Overview
    1. 901.01Scope of the chapter
    2. 901.02Two questions about control
    3. 901.03Sources
    4. 901.04Organization
  2. ¶ 910Control and the International Trust: The Statutory Scheme
    1. 910.01The general law position
    2. 910.02The statutory modifications
    3. 910.03Section 13C in context
    4. 910.04The settlor's powers and the fraudulent-disposition rule
    5. 910.05What the Act does not do
    6. 910.06Revocable international trusts
  3. ¶ 920The Protector Under the Act
    1. 920.01Origin of the office
    2. 920.02The 1989 definition
    3. 920.03The 1995–96 definition
    4. 920.04Section 20 as enacted in 1995–96
    5. 920.05Section 20 as substituted in 1999
    6. 920.06What changed in 1999
    7. 920.07The protector and the trustee distinguished
    8. 920.08Nominated persons for beneficiaries
  4. ¶ 930Fiduciary or Personal: The Character of Protector Powers
    1. 930.01The question
    2. 930.02What section 20(4) decides
    3. 930.03The cases in other offshore jurisdictions
    4. 930.04Declarations that a protector is not a fiduciary
    5. 930.05The comparative position
    6. 930.06The character of the settlor's own powers
  5. ¶ 940Choosing, Appointing and Replacing the Protector
    1. 940.01The functions the protector serves
    2. 940.02Candidates
    3. 940.03Residence
    4. 940.04Succession
    5. 940.05Removal of a protector by the Court
    6. 940.06Due diligence and disclosure
    7. 940.07Terms of appointment
  6. ¶ 950Reserved Powers: Section 13C and Its Limits
    1. 950.01The text
    2. 950.02Reading the section
    3. 950.03Webb and the registered trust
    4. 950.04Powers as property
    5. 950.05Bankruptcy
    6. 950.06The three ways a trust fails through control
    7. 950.07Powers held through others
  7. ¶ 960Settlor Benefit: The Settlor as Beneficiary
    1. 960.01Why the settlor is a beneficiary
    2. 960.02Bankruptcy and creditors under the Act
    3. 960.03The spendthrift provision
    4. 960.04The settlor's home law
    5. 960.05Fixed and discretionary interests
    6. 960.06Saunders v. Vautier
    7. 960.07Distributions in practice
    8. 960.08Excluding the settlor
  8. ¶ 970Duress Provisions and Flight
    1. 970.01The function of a duress clause
    2. 970.02No statutory duress provision
    3. 970.03What the Act does provide: change of governing law on an event
    4. 970.04The significance of section 13G(12)
    5. 970.05Elements of a duress clause
    6. 970.06Flight powers that can be reversed
    7. 970.07Limits on flight
  9. ¶ 980Duress Provisions Before Foreign Courts: Contempt and Impossibility
    1. 980.01How a home court proceeds
    2. 980.02What Affordable Media teaches about drafting
    3. 980.03Lawrence and the void duress amendment
    4. 980.04Cook Islands trusts in the contempt cases
    5. 980.05The self-created impossibility rule
    6. 980.06What a duress clause can and cannot do
  10. ¶ 990Planning and Drafting
    1. 990.01The design principle
    2. 990.02Drafting checklist
    3. 990.03After the claim

Chapter 10Purpose Trusts and Charitable Trusts

  1. ¶ 1001Overview
    1. 1001.01Scope of the chapter
    2. 1001.02What this chapter does not repeat
    3. 1001.03Two meanings of "purpose trust."
    4. 1001.04Why the Cook Islands provisions matter
    5. 1001.05Terminology
  2. ¶ 1010The Beneficiary Principle under the General Law
    1. 1010.01The rule
    2. 1010.02Re Astor and the requirement of enforcement
    3. 1010.03The anomalous exceptions
    4. 1010.04The Denley principle
    5. 1010.05Unincorporated associations
    6. 1010.06The rules against perpetuities and inalienability
    7. 1010.07Why offshore statutes depart from the rule
  3. ¶ 1020Section 12(2): Non-Charitable Purpose Trusts
    1. 1020.01The text
    2. 1020.02The 1984 text and the 1995–96 changes
    3. 1020.03The settlor must be non-resident
    4. 1020.04Must the trust be an international trust?
    5. 1020.05"Shall not be void or voidable."
    6. 1020.06Certainty of purpose
    7. 1020.07Mixed trusts
    8. 1020.08Comparison with other jurisdictions
  4. ¶ 1030The Enforcer
    1. 1030.01The office
    2. 1030.02Resignation, removal and vacancy
    3. 1030.03Who may be enforcer
    4. 1030.04The enforcer as protector
    5. 1030.05The enforcer's duties
    6. 1030.06The enforcer's rights
    7. 1030.07A vacancy and the Attorney-General
    8. 1030.08Removal of the enforcer
    9. 1030.09Remuneration and indemnity
  5. ¶ 1040Duration, Failure and Surplus
    1. 1040.01No perpetuity limit
    2. 1040.02The hundred-year rule
    3. 1040.03How a purpose trust ends
    4. 1040.04The resulting trust to the settlor
    5. 1040.05The default recipient
    6. 1040.06The default recipient must be non-resident
    7. 1040.07Varying the purpose
    8. 1040.08Registration and deregistration
  6. ¶ 1050Section 12(1): Charitable International Trusts
    1. 1050.01The text
    2. 1050.02The four heads
    3. 1050.03"Substantially."
    4. 1050.04The public-benefit requirement relaxed
    5. 1050.05The other relaxations
    6. 1050.06Enforcement of a charitable international trust
    7. 1050.07Charitable status abroad
  7. ¶ 1060Charitable Trusts under the General Law in the Cook Islands
    1. 1060.01Domestic charities
    2. 1060.02No charities statute
    3. 1060.03The general law of charitable purposes
    4. 1060.04Advancement of religion
    5. 1060.05Incorporated societies
    6. 1060.06Cy-près
    7. 1060.07International trusts for Cook Islands purposes
  8. ¶ 1070Statutory Purpose Trusts (1981–82) and Purpose Foundations (2012)
    1. 1070.01Two related vehicles
    2. 1070.02The statutory purpose trust of 1981–82
    3. 1070.03Character of the statutory purpose trust
    4. 1070.04Repeal
    5. 1070.05The purpose foundation
    6. 1070.06The enforcer of a foundation
    7. 1070.07Default beneficiary and end of the foundation
    8. 1070.08Choosing between a purpose trust and a purpose foundation
  9. ¶ 1080Purpose Trusts in Planning
    1. 1080.01Orphan structures
    2. 1080.02Holding a family company or a private trust company
    3. 1080.03Asset protection
    4. 1080.04Philanthropy
    5. 1080.05Holding a particular asset
    6. 1080.06Foreign recognition
    7. 1080.07Tax and reporting
  10. ¶ 1090Drafting and Checklist
    1. 1090.01What the deed must supply
    2. 1090.02The purpose clause
    3. 1090.03The default recipient clause
    4. 1090.04The variation clause
    5. 1090.05Checklist

Chapter 11Variation, Migration, Change of Governing Law and Termination

  1. ¶ 1101Overview
    1. 1101.01Scope of the chapter
    2. 1101.02Relation to other chapters
    3. 1101.03The statutory text
    4. 1101.04Why the subject matters
  2. ¶ 1110The Means of Change
    1. 1110.01Four sources of power
    2. 1110.02The trust instrument as the principal source
    3. 1110.03The statutory powers
    4. 1110.04"Interested parties."
    5. 1110.05Choosing the route
  3. ¶ 1120Variation under the Trust Instrument
    1. 1120.01The express power of variation
    2. 1120.02Construction of the power
    3. 1120.03A fiduciary power
    4. 1120.04Protecting vested interests
    5. 1120.05Who should hold the power
    6. 1120.06Powers of variation and resettlement as property
    7. 1120.07Resettlement and appointment as means of variation
    8. 1120.08Variation of the vesting period
    9. 1120.09Directions to accumulate
    10. 1120.10The 1996 transitional power
  4. ¶ 1130Variation by Consent and by the Court
    1. 1130.01The rule in Saunders v. Vautier
    2. 1130.02Section 10 and the limits of the rule
    3. 1130.03The court's jurisdiction
    4. 1130.04Administrative powers
    5. 1130.05Rearrangement on behalf of persons who cannot consent
    6. 1130.06The test of detriment
    7. 1130.07Procedure
    8. 1130.08Directions
  5. ¶ 1140Change of Governing Law under Section 13G
    1. 1140.01The choice at settlement
    2. 1140.02The 1989 rule
    3. 1140.03The rule since 1996
    4. 1140.04Effect of the 1996 rule
    5. 1140.05Continuity
    6. 1140.06The donee's exercise
    7. 1140.07Location of the parties and the property
    8. 1140.08Consequential amendments
    9. 1140.09Split governing law
    10. 1140.10Change on the happening of an event
    11. 1140.11Where the deed has no power
  6. ¶ 1150Migrating a Trust to the Cook Islands
    1. 1150.01Why trusts move to the Cook Islands
    2. 1150.02Qualifying and registering
    3. 1150.03When Cook Islands law begins to apply
    4. 1150.04Perpetuities on arrival
    5. 1150.05Section 13K(5): protection reaching back
    6. 1150.06What section 13K(5) achieves
    7. 1150.07Foreign property
    8. 1150.08The steps
  7. ¶ 1160Migrating a Trust Away and Deregistration
    1. 1160.01Why trusts leave
    2. 1160.02The change of law
    3. 1160.03The Cook Islands trustee
    4. 1160.04Registration and renewal
    5. 1160.05Deregistration
    6. 1160.06The consequences of deregistration
    7. 1160.07Deregistration of a departing trust
    8. 1160.08Records after departure
    9. 1160.09Comparators
  8. ¶ 1170Termination
    1. 1170.01How an international trust ends
    2. 1170.02Vesting under the deed
    3. 1170.03The statutory termination date
    4. 1170.04Revocation
    5. 1170.05Termination by the beneficiaries
    6. 1170.06Failure of the trusts
    7. 1170.07Winding up the trust
  9. ¶ 1180Mistake, Defective Exercises and Drafting
    1. 1180.01Why the subject arises
    2. 1180.02Void and voidable exercises
    3. 1180.03Inadequate deliberation and mistake
    4. 1180.04Section 13G(9)
    5. 1180.05Records of decisions
    6. 1180.06Model provisions
  10. ¶ 1190Planning Checklist
    1. 1190.01Drafting the deed
    2. 1190.02Before any variation or change
    3. 1190.03Migrating in
    4. 1190.04Migrating out and deregistration
    5. 1190.05Keeping the registration alive
    6. 1190.06Ending the trust

Part III: Limited Liability Companies

Chapter 12The Limited Liability Companies Act 2008: Formation, Registration and Foreign LLCs

  1. ¶ 1201Overview
    1. 1201.01Scope of the chapter
    2. 1201.02The statute and its amendment
    3. 1201.03What the Act does and does not contain
    4. 1201.04Relation to the other chapters of Part III
    5. 1201.05Terminology and citation
  2. ¶ 1210Origins and Place of the Act
    1. 1210.01The international statutes before 2008
    2. 1210.02The 2008 Act
    3. 1210.03Consequential amendments
    4. 1210.04The LLC in practice
    5. 1210.05Amendment in 2013
    6. 1210.06The pending proposal
  3. ¶ 1220Structure, Construction and the Operating Agreement
    1. 1220.01The nine Parts
    2. 1220.02Rules of construction
    3. 1220.03The operating agreement
    4. 1220.04The operating agreement prevails
    5. 1220.05The non-waivable provisions
    6. 1220.06Matters that must be in writing
    7. 1220.07Application of other Acts
    8. 1220.08Foreign enterprise registration
  4. ¶ 1230Administration: The Registrar and the Trustee Company
    1. 1230.01The Limited Liability Companies Office
    2. 1230.02Powers of inspection
    3. 1230.03Secrecy of the Registrar's officers
    4. 1230.04Lodging through a trustee company
    5. 1230.05The definition of trustee company
    6. 1230.06Reading the definition today
    7. 1230.07Forms, fees and regulations
    8. 1230.08Immunity
  5. ¶ 1240Formation
    1. 1240.01Who may form an LLC
    2. 1240.02The non-residence condition
    3. 1240.03Separate legal personality
    4. 1240.04The name
    5. 1240.05Reservation of a name
    6. 1240.06The articles of organisation
    7. 1240.07The effect of filing
    8. 1240.08Refusal and appeal
    9. 1240.09The certificate of organisation
    10. 1240.10Purposes and powers
    11. 1240.11Unauthorised acts
  6. ¶ 1250Term, Renewal, Reports, Suspension and Reinstatement
    1. 1250.01A twelve-month certificate
    2. 1250.02Existence continues after expiry
    3. 1250.03The annual report
    4. 1250.04Suspension
    5. 1250.05The effect of suspension
    6. 1250.06Reinstatement
    7. 1250.07Dissolution by operation of law
  7. ¶ 1260The Registered Agent, Records and Accounts
    1. 1260.01The registered agent
    2. 1260.02Change of the agent's name or address
    3. 1260.03Resignation of the agent
    4. 1260.04Service of process
    5. 1260.05Accounts
    6. 1260.06Records at the registered office
    7. 1260.07The member's right to information
    8. 1260.08Registered auditors
    9. 1260.09Involuntary dissolution and the agent: a drafting problem
  8. ¶ 1270Amendment of the Articles, Confidentiality, the Crown Guarantee and Offences
    1. 1270.01When the articles must be amended
    2. 1270.02Procedure
    3. 1270.03Confidentiality of proceedings and information
    4. 1270.04The disclosure offence
    5. 1270.05Exceptions
    6. 1270.06Confidentiality and the reporting statutes
    7. 1270.07The Crown guarantee
    8. 1270.08Offences and penalty
  9. ¶ 1280Foreign LLCs and Transfer of Domicile
    1. 1280.01Three situations
    2. 1280.02Transfer of domicile into the Cook Islands
    3. 1280.03The certificate of transfer
    4. 1280.04Continuity of the entity
    5. 1280.05Applicable law after the transfer
    6. 1280.06Transfer of domicile out of the Cook Islands
    7. 1280.07Inbound and outbound compared
    8. 1280.08A foreign LLC carrying on business in the Cook Islands
    9. 1280.09A Cook Islands LLC abroad
    10. 1280.10Internal affairs and the charging order
  10. ¶ 1290Practice: A Formation Checklist and Model Provisions
    1. 1290.01The order of work
    2. 1290.02Formation checklist
    3. 1290.03Model provisions
    4. 1290.04Summary

Chapter 13Members, Managers and the Operating Agreement

  1. ¶ 1301Overview
    1. 1301.01Scope of the chapter
    2. 1301.02Relation to other chapters
    3. 1301.03The statutory method
    4. 1301.04The usual structure
    5. 1301.05No reported decisions
    6. 1301.06Terminology
  2. ¶ 1310The Operating Agreement: Definition, Form and Parties
    1. 1310.01The definition
    2. 1310.02The company's power
    3. 1310.03The articles of organisation
    4. 1310.04Oral and implied agreements
    5. 1310.05The single-member company
    6. 1310.06The company as a party
    7. 1310.07Managers who are not members
    8. 1310.08Amendment
    9. 1310.09The agreement and the trust deed
  3. ¶ 1320Freedom of Contract and the Non-Waivable Provisions
    1. 1320.01The principle
    2. 1320.02"Consistent with law."
    3. 1320.03The list
    4. 1320.04Books, records and information
    5. 1320.05The duty of care
    6. 1320.06Good faith
    7. 1320.07The "best interests" element
    8. 1320.08Filing requirements and third parties
    9. 1320.09Accounts
    10. 1320.10Contributions and the charging order
  4. ¶ 1330Members: Eligibility, Admission and Classes
    1. 1330.01Who is a member
    2. 1330.02Formation on behalf of non-residents
    3. 1330.03The first members
    4. 1330.04Admission of additional members
    5. 1330.05Transfer and the assignor's membership
    6. 1330.06Classes of members
    7. 1330.07Membership interest and membership rights
    8. 1330.08Death, incapacity and dissolution of a member
    9. 1330.09No expulsion
  5. ¶ 1340Member-Managed and Manager-Managed Companies
    1. 1340.01The default: management by the members in proportion to capital
    2. 1340.02Displacing the default
    3. 1340.03Manager-managed companies
    4. 1340.04Management reserved to the members
    5. 1340.05Persons who are both members and managers
    6. 1340.06Appointment, removal and succession of managers
    7. 1340.07The duties of managers
    8. 1340.08The settlor as manager
  6. ¶ 1350Authority, Agency and Company Property
    1. 1350.01Two questions
    2. 1350.02Internal authority
    3. 1350.03Apparent authority
    4. 1350.04Acts outside the usual course
    5. 1350.05Member-managed companies
    6. 1350.06Company property
    7. 1350.07The effect of section 29
    8. 1350.08Unauthorized assumption of powers
    9. 1350.09The company's powers
  7. ¶ 1360Decisions: Voting, Consents and the Unanimity Rules
    1. 1360.01What the Act provides
    2. 1360.02Decisions the Act reserves to all the members
    3. 1360.03Dissolution: the managers' consent
    4. 1360.04Amendments to the articles
    5. 1360.05Meetings and written consents
    6. 1360.06Committees
    7. 1360.07Deadlock
    8. 1360.08Protectors and consent rights
  8. ¶ 1370Contributions, Allocations and Distributions
    1. 1370.01Forms of contribution
    2. 1370.02Liability for contributions
    3. 1370.03Allocation of profits and losses
    4. 1370.04Distributions
    5. 1370.05Distributions in kind
    6. 1370.06The member as creditor
    7. 1370.07The limit on distributions
    8. 1370.08Liability for the return of contributions
    9. 1370.09Resignation and the resigning member's interest
    10. 1370.10Tax payments on behalf of members
  9. ¶ 1380Records, Accounts, Information and the Liability Shield
    1. 1380.01Overview
    2. 1380.02Records at the registered office
    3. 1380.03Information on beneficial ownership
    4. 1380.04Accounts under section 31A
    5. 1380.05The member's right to information
    6. 1380.06Limits on the right
    7. 1380.07The liability shield
    8. 1380.08Confidentiality
  10. ¶ 1390Drafting the Operating Agreement for a Trust-Owned LLC
    1. 1390.01The task
    2. 1390.02The single-member problem abroad
    3. 1390.03Provisions on members
    4. 1390.04Provisions on management
    5. 1390.05Provisions on amendment and consent rights
    6. 1390.06Provisions on distributions and accounts
    7. 1390.07Major decisions
    8. 1390.08Checklist

Chapter 14Fiduciary Duties, Exculpation and Indemnification

  1. ¶ 1401Overview
    1. 1401.01Scope of the chapter
    2. 1401.02Relation to other chapters
    3. 1401.03The Statutory text
    4. 1401.04Why the subject matters
  2. ¶ 1410What the Act Says and Does Not Say
    1. 1410.01Five provisions
    2. 1410.02Section 27: the standard of conduct
    3. 1410.03The origin of the wording
    4. 1410.04Section 8(2): what the operating agreement may not change
    5. 1410.05What the Act omits
    6. 1410.06Freedom of contract and its limits
  3. ¶ 1420Who Owes Duties, and to Whom
    1. 1420.01Managers
    2. 1420.02Members who manage
    3. 1420.03Members of a manager-managed LLC
    4. 1420.04Officers, employees and agents
    5. 1420.05The trustee company as manager
    6. 1420.06To whom the duty is owed
    7. 1420.07Creditors
  4. ¶ 1430Loyalty under the General Law
    1. 1430.01The source of the duty
    2. 1430.02The no-conflict rule
    3. 1430.03The no-profit rule
    4. 1430.04Corporate opportunities
    5. 1430.05Competition
    6. 1430.06Section 30: business with the LLC
  5. ¶ 1440Good Faith, Best Interests and Creditors
    1. 1440.01Two elements in section 27(1)
    2. 1440.02Good faith as loyalty
    3. 1440.03Standards of good faith under section 8(2)(c)
    4. 1440.04What is manifestly unreasonable
    5. 1440.05Best interests in an asset protection structure
    6. 1440.06When the LLC is insolvent or near insolvency
    7. 1440.07The distribution limit
  6. ¶ 1450The Statutory Standard of Care
    1. 1450.01The ordinarily prudent person
    2. 1450.02The professional manager
    3. 1450.03The safe harbour
    4. 1450.04Business judgment
    5. 1450.05Reliance
    6. 1450.06Delegation
    7. 1450.07The standard cannot be reduced
  7. ¶ 1460Modifying Duties by the Operating Agreement
    1. 1460.01The scope of section 8(1)
    2. 1460.02Care and good faith
    3. 1460.03Loyalty
    4. 1460.04Comparison with Delaware
    5. 1460.05The irreducible core
    6. 1460.06Terms implied into the agreement
    7. 1460.07Drafting provisions on duties
  8. ¶ 1470Conflicts and Related-Party Transactions
    1. 1470.01No statutory safe harbour
    2. 1470.02Types of conflict
    3. 1470.03Remuneration
    4. 1470.04Who gives consent
    5. 1470.05Fairness
    6. 1470.06Dealings on dissolution and transfer
  9. ¶ 1480Exculpation, Indemnification, Advancement and Insurance
    1. 1480.01Four devices
    2. 1480.02Exculpation and section 8(2)(b)
    3. 1480.03The better view
    4. 1480.04The statutory safe harbour as exculpation
    5. 1480.05Mandatory indemnification
    6. 1480.06Employees and agents, and the question of extension
    7. 1480.07Advancement
    8. 1480.08Insurance
    9. 1480.09The trustee company as manager
    10. 1480.10Model provisions
  10. ¶ 1490Enforcement, Remedies and a Drafting Checklist
    1. 1490.01The LLC as claimant
    2. 1490.02Derivative claims
    3. 1490.03Members' personal claims
    4. 1490.04Confidential proceedings
    5. 1490.05Remedies
    6. 1490.06After the LLC departs
    7. 1490.07Foreign proceedings against the manager
    8. 1490.08Drafting checklist

Chapter 15Members' Creditors: The Charging Order and Its Limits

  1. ¶ 1501Overview
    1. 1501.01Scope of the chapter
    2. 1501.02Plan of the chapter
    3. 1501.03Relation to other chapters
    4. 1501.04The purpose of the section
    5. 1501.05Sources
    6. 1501.06Terminology
  2. ¶ 1510Membership Rights Beyond the Reach of Execution
    1. 1510.01The general bar
    2. 1510.02What is protected
    3. 1510.03What is barred
    4. 1510.04General assignment
    5. 1510.05Intestacy
    6. 1510.06Bankruptcy
    7. 1510.07The transferability of the interest
    8. 1510.08The statute and the operating agreement
    9. 1510.09Property of the company
  3. ¶ 1520Who May Apply: The Creditor and the Cook Islands Judgment
    1. 1520.01The definition
    2. 1520.02A judgment of the High Court
    3. 1520.03Recognition and subsection (14)
    4. 1520.04General assignees
    5. 1520.05Who is not a Creditor
    6. 1520.06The interaction with the International Trusts Act
  4. ¶ 1530The Charging Order: Content, Procedure, Interim Orders and Discharge
    1. 1530.01The application
    2. 1530.02What the order gives
    3. 1530.03The excluded damages
    4. 1530.04Interest and costs
    5. 1530.05Interim charging orders
    6. 1530.06Distributions under an interim order
    7. 1530.07Discharge
    8. 1530.08No redemption
  5. ¶ 1540The Exclusive Remedy and Its Corollaries
    1. 1540.01The sole and exclusive remedy
    2. 1540.02The avoidance-of-doubt provisions
    3. 1540.03No lien
    4. 1540.04Not an assignee
    5. 1540.05The member keeps its rights
    6. 1540.06No interference in management
    7. 1540.07No interlocutory orders against the company
    8. 1540.08Foreign interlocutory orders
    9. 1540.09The single-member company
  6. ¶ 1550Five Years, Non-Renewable
    1. 1550.01The rule
    2. 1550.02The effect
    3. 1550.03Computing the term
    4. 1550.04"Non-renewable."
    5. 1550.05The judgment survives
    6. 1550.06The company's conduct during the term
  7. ¶ 1560Distributions, Valuation, Clawback, Capital Calls and Tax Payments
    1. 1560.01The distribution decision
    2. 1560.02Allocation among members
    3. 1560.03The limitation on distributions
    4. 1560.04Payments that are not distributions
    5. 1560.05Valuation
    6. 1560.06Repayment of distributions received by the Creditor
    7. 1560.07Capital calls
    8. 1560.08Payment of members' taxes under the present Act
    9. 1560.09The proposal on tax payments
  8. ¶ 1570Bankruptcy, Death and the Single-Member Company
    1. 1570.01The member's bankruptcy under the Act
    2. 1570.02No default dissolution and no loss of membership
    3. 1570.03The American bankruptcy court
    4. 1570.04Multi-member companies in American bankruptcy
    5. 1570.05The trustee in the Cook Islands
    6. 1570.06Death and incompetency
    7. 1570.07Dissolution of an entity member
    8. 1570.08Intestacy and creditors of the deceased
    9. 1570.09The single-member company
  9. ¶ 1580Comparisons and the View from Foreign Courts
    1. 1580.01Three questions
    2. 1580.02Nevis
    3. 1580.03Belize
    4. 1580.04Delaware and Wyoming
    5. 1580.05Florida and the single-member company
    6. 1580.06The uniform act
    7. 1580.07Which law governs the interest
    8. 1580.08Forum statutes confined to domestic companies
    9. 1580.09The protection is territorial
    10. 1580.10Assets held abroad
    11. 1580.11Attacks on the company's separateness and on the transfer
    12. 1580.12Courts acting on the member
  10. ¶ 1590Drafting, Practice and a Checklist
    1. 1590.01The drafting task
    2. 1590.02Distributions
    3. 1590.03Capital calls
    4. 1590.04Continuity
    5. 1590.05Management and residence
    6. 1590.06Conduct after a charging order
    7. 1590.07Checklist
    8. 1590.08Summary

Chapter 16Transfers, Withdrawal, Dissolution, Mergers, Continuation and Conversion

  1. ¶ 1601Overview
    1. 1601.01Scope of the chapter
    2. 1601.02The statutory text
    3. 1601.03What the Act contains and what it omits
    4. 1601.04Relation to other chapters
    5. 1601.05No reported decisions
  2. ¶ 1610The Member's Interest and Its Assignment
    1. 1610.01The interest as personal property
    2. 1610.02What may be transferred
    3. 1610.03The assignor ceases to be a member
    4. 1610.04The assignee's position
    5. 1610.05The policy of separating economic and governance rights
    6. 1610.06A company with no members
    7. 1610.07Restrictions on assignment
    8. 1610.08Pledges and security interests
    9. 1610.09Change in control of an entity member
    10. 1610.10Assignment and the member's creditors
  3. ¶ 1620Death, Incompetency and Dissolution of a Member
    1. 1620.01The statutory rule
    2. 1620.02The company is not dissolved
    3. 1620.03The representative's powers
    4. 1620.04Incompetency
    5. 1620.05Entity members
    6. 1620.06Changes of trustee
    7. 1620.07Bankruptcy of a member
    8. 1620.08Intestacy
  4. ¶ 1630Resignation, Withdrawal, Expulsion and Redemption
    1. 1630.01The default right to resign
    2. 1630.02The resigning member keeps its economic interest
    3. 1630.03The status of a resigned member
    4. 1630.04Resignation and compulsion
    5. 1630.05No statutory power to expel
    6. 1630.06Forfeiture and the penalty rule
    7. 1630.07Buying out a member
    8. 1630.08Redemption and the distribution limit
    9. 1630.09Distributions in kind
  5. ¶ 1640Voluntary Dissolution
    1. 1640.01The two events
    2. 1640.02Agreement of all members and managers
    3. 1640.03Events specified in writing
    4. 1640.04No revocation of dissolution
    5. 1640.05The statement of intent to dissolve
    6. 1640.06A manager who will not file
    7. 1640.07The effect of filing
    8. 1640.08Supervised liquidation
  6. ¶ 1650Suspension, Dissolution by Operation of Law and Involuntary Dissolution
    1. 1650.01The routes compared
    2. 1650.02Suspension
    3. 1650.03Reinstatement and its limit
    4. 1650.04Dissolution by operation of law
    5. 1650.05The Registrar's action for involuntary dissolution
    6. 1650.06Notice and cure
    7. 1650.07Liquidation by the Court
    8. 1650.08No remedy for a member
    9. 1650.09Deadlock provisions
  7. ¶ 1660Winding Up, Distribution and the End of the Company
    1. 1660.01Who winds up
    2. 1660.02The order of distribution
    3. 1660.03Claims and the absence of a bar
    4. 1660.04The articles of dissolution
    5. 1660.05The effect of filing the articles
    6. 1660.06Claims against members after distribution
    7. 1660.07Records after dissolution
    8. 1660.08Property of a company dissolved by operation of law
    9. 1660.09Practical consequences
  8. ¶ 1670Mergers, Consolidations and Sales of the Business
    1. 1670.01No statutory merger
    2. 1670.02The International Companies Act does not help
    3. 1670.03Combining two companies by transfer of assets
    4. 1670.04Combining by transfer of interests
    5. 1670.05Combining through another jurisdiction
    6. 1670.06Sale of all the assets
    7. 1670.07Sale of the company by sale of interests
    8. 1670.08No division
  9. ¶ 1680Continuation, Transfer of Domicile and Conversion
    1. 1680.01Terms
    2. 1680.02The effect of an inbound transfer
    3. 1680.03What an inbound transfer does not do
    4. 1680.04The members' interests after an inbound transfer
    5. 1680.05Approval of an outbound transfer
    6. 1680.06When the departure takes effect
    7. 1680.07The Court's jurisdiction after departure
    8. 1680.08Departure under pressure
    9. 1680.09International companies and LLCs
    10. 1680.10No conversion
    11. 1680.11The proposed governing-law provision
  10. ¶ 1690United States Tax Effects in Outline, and a Drafting Checklist
    1. 1690.01Scope
    2. 1690.02Classification governs everything
    3. 1690.03Transfers, death and withdrawal
    4. 1690.04Change of domicile
    5. 1690.05Changes of form and classification
    6. 1690.06Combinations
    7. 1690.07Dissolution and liquidation
    8. 1690.08Drafting checklist

Chapter 17Cook Islands LLCs in International Structures, U.S. Entity Classification and the Proposed Revisions to the Act

  1. ¶ 1701Overview
    1. 1701.01Scope of the chapter
    2. 1701.02Relation to other chapters
    3. 1701.03The proposal and the law
    4. 1701.04Plan of the chapter
    5. 1701.05Terms
  2. ¶ 1710The LLC in Cook Islands Structures
    1. 1710.01Why the LLC is used
    2. 1710.02The trust-and-LLC structure
    3. 1710.03What each part contributes
    4. 1710.04Two statutes in the creditor's path
    5. 1710.05Variations
    6. 1710.06The non-residence condition
  3. ¶ 1720Management, Control and the Reach of Foreign Courts
    1. 1720.01What section 45 binds
    2. 1720.02Jurisdiction over the LLC
    3. 1720.03Orders directed to persons
    4. 1720.04The settlor as manager
    5. 1720.05Compelled instructions under the present Act
    6. 1720.06Assets in the United States
  4. ¶ 1730The Member's Interest Before Foreign Courts: Governing Law and Situs
    1. 1730.01The question
    2. 1730.02The internal affairs doctrine
    3. 1730.03The forum's own charging-order statute
    4. 1730.04The interest as intangible property
    5. 1730.05The trustee as member
    6. 1730.06Recognition in the Cook Islands
  5. ¶ 1740United States Entity Classification and Reporting
    1. 1740.01Classification is a federal question
    2. 1740.02Not a per se corporation
    3. 1740.03The default rule for a foreign eligible entity
    4. 1740.04The election
    5. 1740.05The trust-owned single-member LLC
    6. 1740.06The multi-member LLC
    7. 1740.07Reporting
    8. 1740.08A Cook Islands LLC owning an American LLC
    9. 1740.09Cook Islands classification is separate
  6. ¶ 1750The 2026 Committee Proposal: Status and Method
    1. 1750.01Status
    2. 1750.02Form of the proposal
    3. 1750.03How this chapter treats it
    4. 1750.04What the proposal would do
    5. 1750.05What it would not change
  7. ¶ 1760Proposed Definitions, Operating Agreement, Protectors and Governing Law
    1. 1760.01Assignee and assignment (proposed)
    2. 1760.02Change in control (proposed)
    3. 1760.03Business entity, person and property (proposed)
    4. 1760.04The operating agreement (proposed)
    5. 1760.05The protector (proposed)
    6. 1760.06Governing law (proposed section 17A)
    7. 1760.07Series (proposed definition)
  8. ¶ 1770Proposed Provisions on Compelled Instructions, Distributions, Certificates, Assignment, Expulsion and Series
    1. 1770.01Protection from interference (proposed section 32A)
    2. 1770.02Purpose and limits of section 32A (proposed)
    3. 1770.03Allocations, distributions and tax payments (proposed section 35)
    4. 1770.04Certificates (proposed section 44(2))
    5. 1770.05The effect of a deemed situs
    6. 1770.06Rights of an assignee and expulsion (proposed sections 44 and 46A)
    7. 1770.07Series (proposed section 48A)
  9. ¶ 1780A Fraudulent-Transfer Rule for LLCs: Proposed Section 45A
    1. 1780.01The present law
    2. 1780.02The elements (proposed section 45A(1))
    3. 1780.03Solvency (proposed section 45A(2)–(3))
    4. 1780.04Limitation (proposed section 45A(4)–(5))
    5. 1780.05Reading the one-year limb
    6. 1780.06Intent, burden and recovery (proposed section 45A(6)–(8), (15))
    7. 1780.07Exclusivity, foreign judgments and procedure (proposed section 45A(9)–(14))
    8. 1780.08How the proposal would fit the trust-and-LLC structure
  10. ¶ 1790Planning Under the Present Act, Model Provisions and Checklist
    1. 1790.01Plan on the enacted Act
    2. 1790.02Changes in control of an entity member
    3. 1790.03Managers, protectors and amendment
    4. 1790.04The proposal and transition
    5. 1790.05The structure carries the protection
    6. 1790.06Checklist

Part IV: Foundations

Chapter 18The Foundations Act 2012: Nature, Formation and Registration

  1. ¶ 1801Overview
    1. 1801.01Scope of the chapter
    2. 1801.02The entity in brief
    3. 1801.03Why the statute matters
    4. 1801.04Plan of the chapter
    5. 1801.05Terminology
  2. ¶ 1810Origins, Enactment and Place of the Act
    1. 1810.01The civil-law foundation
    2. 1810.02Reception in the common-law offshore world
    3. 1810.03Enactment
    4. 1810.04Architecture
    5. 1810.05The 2013 amendment
    6. 1810.06The Trustee Companies Act 2014
    7. 1810.07Use of the Act
    8. 1810.08Relation to the other statutes
  3. ¶ 1820The Nature of a Foundation
    1. 1820.01Legal personality
    2. 1820.02When personality begins
    3. 1820.03Owner of its assets
    4. 1820.04Beneficiaries have no interest
    5. 1820.05What the beneficiary holds
    6. 1820.06Capacity
    7. 1820.07The trading restriction
    8. 1820.08Not a company
    9. 1820.09Not a trust
    10. 1820.10The council's duties run to the foundation
    11. 1820.11Suing and being sued
  4. ¶ 1830Objects: Persons, Purposes, Charitable and Non-Charitable
    1. 1830.01The objects must be stated
    2. 1830.02The test
    3. 1830.03Who applies the test
    4. 1830.04Persons, purposes or both
    5. 1830.05Charitable, non-charitable or both
    6. 1830.06Keeping the beneficiaries out of the public document
    7. 1830.07Keeping the purpose out of the public document
    8. 1830.08Changing the beneficiaries
    9. 1830.09Purpose foundations and purpose trusts
  5. ¶ 1840The Foundation Instrument
    1. 1840.01Two documents
    2. 1840.02Requirement and language
    3. 1840.03Contents required by the Act
    4. 1840.04The name
    5. 1840.05Change of name
    6. 1840.06The objects
    7. 1840.07The registered agent
    8. 1840.08A public document
  6. ¶ 1850The Foundation Rules
    1. 1850.01Requirement and language
    2. 1850.02Approval and custody
    3. 1850.03Mandatory contents: the council
    4. 1850.04Mandatory contents: the registered agent
    5. 1850.05Resignation of the registered agent
    6. 1850.06Mandatory contents: the enforcer, if any
    7. 1850.07Mandatory contents: the default beneficiary
    8. 1850.08Mandatory if relevant: the term
    9. 1850.09Optional contents
    10. 1850.10Rules that displace Cook Islands law
    11. 1850.11Model rules
    12. 1850.12Who may see the rules
  7. ¶ 1860Founders, Dedicators and the Endowment
    1. 1860.01The founder
    2. 1860.02No residence requirement
    3. 1860.03Nominee founders
    4. 1860.04The dedicator
    5. 1860.05The endowment
    6. 1860.06Establishment and operation
    7. 1860.07Formalities of transfer
    8. 1860.08Capacity of the founder and the dedicator
    9. 1860.09The founder's rights
    10. 1860.10Revocation
    11. 1860.11The founder's creditors in outline
  8. ¶ 1870Establishment, Registration, Renewal and the Registrar
    1. 1870.01Only a trustee company may apply
    2. 1870.02The application
    3. 1870.03Grounds of refusal
    4. 1870.04Appeals
    5. 1870.05Establishment
    6. 1870.06Entry in the register and the certificate
    7. 1870.07The registered agent
    8. 1870.08Annual renewal
    9. 1870.09What happens if renewal is not made
    10. 1870.10Amendment of the instrument
    11. 1870.11The register
    12. 1870.12The Registrar
    13. 1870.13Other enactments
    14. 1870.14Offences
  9. ¶ 1880Migration, Revocation, Termination and Dissolution
    1. 1880.01Part 5 in outline
    2. 1880.02Inbound migration: conditions
    3. 1880.03The application
    4. 1880.04The declaration of compliance
    5. 1880.05Effect of inbound registration
    6. 1880.06Cancellation of an inbound registration
    7. 1880.07Outbound transfer: conditions
    8. 1880.08The outbound application
    9. 1880.09Effect of transfer
    10. 1880.10Objections to transfer
    11. 1880.11Termination
    12. 1880.12Winding up by the High Court
    13. 1880.13Conduct of the winding up
    14. 1880.14Order of distribution
    15. 1880.15Personal liability of council members
    16. 1880.16The High Court's supervisory powers
    17. 1880.17Drafting slips
  10. ¶ 1890Choosing a Foundation; Nevis and Belize Compared; Formation Checklist
    1. 1890.01When a foundation is the right vehicle
    2. 1890.02When an international trust is better
    3. 1890.03Tax classification abroad
    4. 1890.04Foundations with trusts and LLCs
    5. 1890.05Nevis and Belize
    6. 1890.06Names and registration compared
    7. 1890.07Formation checklist

Chapter 19Foundation Governance: The Council, Protectors, Beneficiaries and Records

  1. ¶ 1901Overview
    1. 1901.01The subject of the chapter
    2. 1901.02The statute and its name for the governing body
    3. 1901.03Where the governance provisions sit
    4. 1901.04The source text
    5. 1901.05The structure of the Act's governance provisions
    6. 1901.06Comparison with the Nevis and Jersey models
  2. ¶ 1910The Council: Establishment, Composition and Qualification
    1. 1910.01The council as a mandatory organ
    2. 1910.02What the rules must say about the council
    3. 1910.03Size of the council
    4. 1910.04Corporate and individual members
    5. 1910.05Qualifications and disqualifications
    6. 1910.06The registered agent on the council
    7. 1910.07No residence requirement for council members
    8. 1910.08Appointment, retirement, removal and remuneration
    9. 1910.09Validity of acts despite a defective appointment
  3. ¶ 1920Council Duties, Decisions and the Conduct of Business
    1. 1920.01The duty to act in accordance with the constitution and the law
    2. 1920.02Good faith and the best interests of the foundation
    3. 1920.03The standard of care
    4. 1920.04To whom the duties are owed
    5. 1920.05Decisions of the council
    6. 1920.06Approval by persons outside the council
    7. 1920.07Delegation
    8. 1920.08Capacity, and the effect of acts outside the rules
    9. 1920.09Conflicts of interest
  4. ¶ 1930Liability, Exculpation, Insurance, Remuneration and Offences
    1. 1930.01Who section 26 covers
    2. 1930.02The floor of liability
    3. 1930.03Insurance
    4. 1930.04Indemnity
    5. 1930.05Remuneration
    6. 1930.06Offences and personal criminal liability
    7. 1930.07Personal liability for the foundation's debts in an insolvent winding up
  5. ¶ 1940The Enforcer
    1. 1940.01An optional office
    2. 1940.02Who may be the enforcer
    3. 1940.03The enforcer's duty
    4. 1940.04The power to require an account
    5. 1940.05Approval and veto powers
    6. 1940.06The power to sanction action outside the rules
    7. 1940.07When to exclude the default sanction power
    8. 1940.08The enforcer of a purpose foundation
  6. ¶ 1950Founders, Protectors and Other Persons Appointed Under the Rules
    1. 1950.01The founder
    2. 1950.02The founder's rights come only from the rules
    3. 1950.03Other persons with rights under the rules
    4. 1950.04The protector of a foundation
    5. 1950.05Assignment of rights
    6. 1950.06What happens on the founder's death
    7. 1950.07Reserved rights and the founder's creditors
    8. 1950.08Rights of revocation
  7. ¶ 1960Beneficiaries: No Interest, the Right to a Benefit, and the Court
    1. 1960.01Who is a beneficiary
    2. 1960.02No residence requirement
    3. 1960.03Changing the class
    4. 1960.04No interest in the assets
    5. 1960.05The right to a benefit once entitled
    6. 1960.06The three-year limit
    7. 1960.07Standing as a person with sufficient interest
    8. 1960.08Unborn and incapable beneficiaries
    9. 1960.09The default beneficiary
  8. ¶ 1970Information, Confidentiality and the Public Register
    1. 1970.01The statutory right to information
    2. 1970.02The rules may prohibit disclosure
    3. 1970.03The Court's power to override the rules
    4. 1970.04The general law of trust information compared
    5. 1970.05What is on the public register
    6. 1970.06No statutory confidentiality offence
    7. 1970.07Copies of the rules
    8. 1970.08Regulatory and law-enforcement access
  9. ¶ 1980Records, Accounts and the Registered Agent
    1. 1980.01Documents kept at the registered office
    2. 1980.02Financial records and financial statements
    3. 1980.03Where the records are kept
    4. 1980.04The demand for financial statements
    5. 1980.05The registered agent
    6. 1980.06Changing the registered agent
    7. 1980.07Resignation of the registered agent
    8. 1980.08The Registrar's records
  10. ¶ 1990The Court's Supervisory Powers, Drafting the Governance Provisions and a Checklist
    1. 1990.01Who may apply to the Court
    2. 1990.02The orders the Court may make
    3. 1990.03Comparison with Nevis and Jersey
    4. 1990.04Drafting the governance provisions
    5. 1990.05Governance checklist

Chapter 20Foundations in Planning: Succession, Forced Heirship, Creditor Protection and Foundations with Trusts

  1. ¶ 2001Overview
    1. 2001.01Scope of the chapter
    2. 2001.02Plan of the chapter
    3. 2001.03Relation to other chapters
    4. 2001.04Sources
    5. 2001.05The lineage of the protective provisions
  2. ¶ 2010The Foundation as a Succession Vehicle
    1. 2010.01Why a foundation carries wealth across a death
    2. 2010.02The founder's rights
    3. 2010.03What becomes of the founder's rights on death
    4. 2010.04Reading the default rule
    5. 2010.05Beneficiaries have no interest in the assets
    6. 2010.06Information
    7. 2010.07Duration, the default beneficiary and the end of the foundation
    8. 2010.08No foundation by will
    9. 2010.09Endowment before operation
    10. 2010.10The succession features summarised
  3. ¶ 2020Forced Heirship and Personal-Relationship Claims: Sections 36 and 37
    1. 2020.01The problem
    2. 2020.02Section 36: Cook Islands law governs
    3. 2020.03The limits of section 36
    4. 2020.04Section 37: three reasons that may not be used
    5. 2020.05The first reason
    6. 2020.06The second reason: personal relationships
    7. 2020.07The second reason: heirship rights
    8. 2020.08The third reason: foreign judgments and orders
    9. 2020.09Comparison with the International Trusts Act
    10. 2020.10Where section 37 is wider and where it is narrower
    11. 2020.11What section 37 cannot do
    12. 2020.12Where the heirs can reach
  4. ¶ 2030Creditors of the Founder: Sections 38 and 39
    1. 2030.01The founder's bankruptcy
    2. 2030.02Section 39: the single remedy
    3. 2030.03The solvency test
    4. 2030.04The time rules
    5. 2030.05Matters that do not show intent
    6. 2030.06The limits of recovery
    7. 2030.07Exclusive remedy
    8. 2030.08Who is a creditor
    9. 2030.09Foundations no longer registered
    10. 2030.10Comparison with the trust and with Nevis
  5. ¶ 2040Bars to Suit and Foreign Judgments: Sections 37(7), 39(13)–(16) and 40
    1. 2040.01The two-year bar
    2. 2040.02The affidavit and the threshold
    3. 2040.03No substitute relief
    4. 2040.04Foreign judgments: section 37(7)
    5. 2040.05The contrast with section 13D
    6. 2040.06Exhaustion and punitive damages
    7. 2040.07Security for costs
    8. 2040.08The procedural path
  6. ¶ 2050Creditors of Beneficiaries and of the Foundation
    1. 2050.01A beneficiary's creditors
    2. 2050.02No spendthrift provision is needed
    3. 2050.03The foundation's own creditors
    4. 2050.04Winding up on a creditor's application
    5. 2050.05The order of distribution
    6. 2050.06Personal liability of council members
    7. 2050.07Exoneration and insurance
  7. ¶ 2060Founder Control and Its Risks
    1. 2060.01What the founder may keep
    2. 2060.02Control and the Cook Islands court
    3. 2060.03Control and the foreign court
    4. 2060.04Beneficial ownership and reporting
    5. 2060.05How much control to keep
  8. ¶ 2070Foundations with Trusts and Limited Liability Companies
    1. 2070.01The foundation as owner of a limited liability company
    2. 2070.02The foundation as beneficiary of an international trust
    3. 2070.03The foundation as trustee
    4. 2070.04The trust as founder or holder of founder's rights
    5. 2070.05A foundation or an international trust?
    6. 2070.06Using both
    7. 2070.07Privacy of the register
  9. ¶ 2080Revocation, Migration and Exit
    1. 2080.01Revocation
    2. 2080.02The consequences of revocation for planning
    3. 2080.03Migration into the Cook Islands
    4. 2080.04The migrating foundation and the time rules
    5. 2080.05Migration out of the Cook Islands
    6. 2080.06The creditor's power to stop a migration
    7. 2080.07Protection after departure
    8. 2080.08Winding up and dissolution
  10. ¶ 2090Worked Structures, Model Provisions and a Checklist
    1. 2090.01Structure A: the succession foundation
    2. 2090.02Structure B: the heirship-protected foundation
    3. 2090.03Structure C: the foundation beside an international trust
    4. 2090.04Model provisions
    5. 2090.05Using the model provisions
    6. 2090.06Checklist

Part V: Creditor Protection and Litigation

Chapter 21Fraudulent Dispositions: Section 13B, the Standard of Proof, Limitation Periods and the Solvency Test

  1. ¶ 2101Overview
    1. 2101.01Scope of the chapter
    2. 2101.02Relation to other chapters
    3. 2101.03The text used
    4. 2101.04Plan of the chapter
    5. 2101.05Terms
  2. ¶ 2110Background: The Statute of Elizabeth and the Design of Section 13B
    1. 2110.01The general law
    2. 2110.02The 1984 Act
    3. 2110.03The 1989 code
    4. 2110.04Amendments, 1989 to 1999
    5. 2110.05The design
  3. ¶ 2120The Elements of a Claim under Section 13B(1)
    1. 2120.01The provision
    2. 2120.02Five elements
    3. 2120.03The creditor
    4. 2120.04The transfer
    5. 2120.05Principal intent to defraud that creditor
    6. 2120.06Rendering the settlor insolvent or without property
    7. 2120.07The effect: liability without avoidance
  4. ¶ 2130The Standard and Burden of Proof
    1. 2130.01Beyond reasonable doubt
    2. 2130.02The onus
    3. 2130.03No imputed intent
    4. 2130.04What "solely" means
    5. 2130.05Section 13K and interim relief
    6. 2130.06Obtaining the evidence: section 23
  5. ¶ 2140Limitation Periods: Accrual, Section 13B(3) and (4), and Section 13K
    1. 2140.01Three time rules
    2. 2140.02Accrual
    3. 2140.03The effect of the accrual rule
    4. 2140.04Transfers before accrual: section 13B(4)
    5. 2140.05Transfers two years or more after accrual: section 13B(3)(a)
    6. 2140.06Transfers within two years after accrual: section 13B(3)(b)
    7. 2140.07The proviso for pending proceedings
    8. 2140.08Section 13K: two years to sue in the High Court
  6. ¶ 2150The Solvency Test of Section 13B(2)
    1. 2150.01The provision
    2. 2150.02A creditor-by-creditor test
    3. 2150.03Fair market value
    4. 2150.04Property counted
    5. 2150.05The time of the test
    6. 2150.06Valuing the creditor's claim
  7. ¶ 2160What the Creditor Recovers and the Limits on Recovery
    1. 2160.01Liability, measured by the settlor's interest
    2. 2160.02Recourse limited to the property or its proceeds
    3. 2160.03The exclusive remedy
    4. 2160.04Foreign judgments: exhaustion first
    5. 2160.05Punitive and multiplied damages
    6. 2160.06Bankruptcy: section 13A
    7. 2160.07Retained powers and benefits
    8. 2160.08Deregistered trusts
  8. ¶ 2170Foundations and LLCs
    1. 2170.01The Foundations Act 2012
    2. 2170.02The foundation rule
    3. 2170.03LLCs: no statutory rule
    4. 2170.04The committee proposal
    5. 2170.05The trust-and-LLC structure
  9. ¶ 2180Comparisons: Nevis, Belize and the United States
    1. 2180.01Two designs
    2. 2180.02Nevis
    3. 2180.03Belize
    4. 2180.04The United States
    5. 2180.05Two analyses, opposite results
    6. 2180.06Self-settled trusts at common law
    7. 2180.07English-law jurisdictions
  10. ¶ 2190Planning: Funding, Documentation and a Checklist
    1. 2190.01The lesson of the chapter
    2. 2190.02Fund early
    3. 2190.03Identify every known claim
    4. 2190.04Keep enough outside the trust
    5. 2190.05Document the purpose
    6. 2190.06Fund in one step where possible
    7. 2190.07Transfer to the trust before the LLC
    8. 2190.08Keep the registration current
    9. 2190.09Prepare for the home court
    10. 2190.10Checklist

Chapter 22Bars to Suit: Commencement of Proceedings, Bankruptcy and Other Conditions

  1. ¶ 2201Overview
    1. 2201.01The subject of the chapter
    2. 2201.02The provisions
    3. 2201.03No consolidated text
    4. 2201.04Why the conditions matter
    5. 2201.05The structure of the chapter
    6. 2201.06Terminology
  2. ¶ 2210The Conditions on Suit and Their History
    1. 2210.01Three kinds of condition
    2. 2210.02The gatekeeping design
    3. 2210.03The 1984 Act
    4. 2210.04The 1989 Act
    5. 2210.05The 1991 Act
    6. 2210.06Orange Grove and the 1995–96 Act
    7. 2210.07The 1999 Act
    8. 2210.08Reading a decision against the Act then in force
    9. 2210.09The scheme in one place
  3. ¶ 2220Section 13K(1)–(2): Two Years and the High Court
    1. 2220.01The text
    2. 2220.02Two requirements, both mandatory
    3. 2220.03Which proceedings are caught
    4. 2220.04The period runs from the transfer
    5. 2220.05Each disposition has its own period
    6. 2220.06The relation to section 13B(3)
    7. 2220.07"Commenced in the High Court."
    8. 2220.08No power to extend
    9. 2220.09The court's attention to drafting
    10. 2220.10Section 13K(2) and the claimant who says the property was never the settlor's
  4. ¶ 2230Section 13K(3)–(4): The Affidavit and the Threshold Before Any Order
    1. 2230.01The text
    2. 2230.02What the subsection does
    3. 2230.03The change from 1991
    4. 2230.04Satisfaction beyond reasonable doubt at the threshold
    5. 2230.05The affidavit: who swears it
    6. 2230.06The affidavit: what it must contain
    7. 2230.07The affidavit and the first cause of action
    8. 2230.08Disclosure of other proceedings
    9. 2230.09Security in the affidavit
    10. 2230.10The relation to the freezing-order procedure
  5. ¶ 2240Exclusive Remedy, No Substitute Relief, Exhaustion and Punitive Damages
    1. 2240.01The purpose of the remedial bars
    2. 2240.02Section 13B(9): the sole remedy
    3. 2240.03Section 13B(10): other rules of law excluded
    4. 2240.04The Statute of Elizabeth and the Property Law Act
    5. 2240.05Section 13K(6): no substitute relief
    6. 2240.06Section 13I: foreign law cannot found relief
    7. 2240.07The limit of recovery
    8. 2240.08Section 13B(13): exhaustion of remedies and appeals
    9. 2240.09Section 13B(14)–(16): punitive damages
    10. 2240.10The remedial bars and transferees
  6. ¶ 2250Bankruptcy and Insolvency: Section 13A and Foreign Insolvency Officers
    1. 2250.01The text
    2. 2250.02What section 13A does
    3. 2250.03Bankruptcy, insolvency and liquidation
    4. 2250.04The exception for international companies in liquidation
    5. 2250.05The foreign trustee in bankruptcy as creditor
    6. 2250.06The cause of action of a trustee in bankruptcy
    7. 2250.07Foreign bankruptcy orders
    8. 2250.08No cross-border insolvency statute
    9. 2250.09The beneficiary's bankruptcy
  7. ¶ 2260Security for Costs, Privacy and Procedure
    1. 2260.01No statutory bond
    2. 2260.02The power to order security
    3. 2260.03Costs follow the event
    4. 2260.04Privacy and its limits
    5. 2260.05Discovery in a section 13B action
    6. 2260.06Privacy as a bar to knowledge
  8. ¶ 2270Migrated, Older and Deregistered Trusts
    1. 2270.01Which trusts the conditions protect
    2. 2270.02Trusts migrating to the Cook Islands
    3. 2270.03The effect of the deeming
    4. 2270.04Trusts settled before September 8, 1989
    5. 2270.05Trusts registered before November 21, 1996
    6. 2270.06Proceedings pending at an amendment
    7. 2270.07Deregistered trusts
    8. 2270.08What remains after deregistration
  9. ¶ 2280The Comparative Position
    1. 2280.01Nevis
    2. 2280.02Belize
    3. 2280.03The United States
    4. 2280.04The Cook Islands among the three
  10. ¶ 2290Practice for Creditors, Trustees and Planners
    1. 2290.01For the creditor: the clock
    2. 2290.02For the creditor: the affidavit and interim relief
    3. 2290.03For the creditor: the measure of recovery
    4. 2290.04For the trustee
    5. 2290.05For the planner
    6. 2290.06Model provisions
    7. 2290.07Checklist

Chapter 23Foreign Judgments: Section 13D and Non-Recognition

  1. ¶ 2301Overview
    1. 2301.01Scope of the chapter
    2. 2301.02Why the general law matters
    3. 2301.03Plan of the chapter
    4. 2301.04Relation to other chapters
    5. 2301.05Terms
  2. ¶ 2310How a Foreign Judgment Reaches the Cook Islands: The Routes
    1. 2310.01Five routes
    2. 2310.02No registration statute
    3. 2310.03The New Zealand exception
    4. 2310.04The common-law action
    5. 2310.05Recognition without enforcement
    6. 2310.06Arbitral awards
    7. 2310.07Insolvency officeholders
    8. 2310.08The routes summarised
    9. 2310.09The practical result
  3. ¶ 2320The Common-Law Action and Section 173 Memorials
    1. 2320.01The basis of the action
    2. 2320.02International jurisdiction
    3. 2320.03The settlor as defendant
    4. 2320.04The trustee as defendant
    5. 2320.05Defences at common law
    6. 2320.06Section 173 memorials of New Zealand judgments
    7. 2320.07Memorials and section 13D
    8. 2320.08Foreign judgments as debts against the settlor personally
    9. 2320.09Time limits for an action on a foreign judgment
  4. ¶ 2330Section 13D: Text and History
    1. 2330.01The Act as enacted in 1984
    2. 2330.02The 1989 text
    3. 2330.03The drafting of 1989
    4. 2330.04The 1995–96 substitution
    5. 2330.05What changed in 1995–96
    6. 2330.06What the substitution dropped
    7. 2330.07No later amendment
    8. 2330.08The history summarised
  5. ¶ 2340The Two Limbs of Section 13D
    1. 2340.01The structure of the section
    2. 2340.02The override
    3. 2340.03Limb (a): law inconsistent with the Act
    4. 2340.04The common inconsistencies
    5. 2340.05The Trustee Companies Act reference
    6. 2340.06Limb (b): matters governed by Cook Islands law
    7. 2340.07"To the extent that."
    8. 2340.08"In any way entertained."
    9. 2340.09Who is protected
  6. ¶ 2350The Creditor's Local Action after a Foreign Judgment
    1. 2350.01What section 13D leaves
    2. 2350.02The judgment and the time limits
    3. 2350.03Exhaustion of other remedies
    4. 2350.04Punitive and multiplied damages
    5. 2350.05The judgment as evidence
    6. 2350.06The creditor's path
  7. ¶ 2360Family, Heirship, Tax and Penal Judgments
    1. 2360.01Personal-relationship and heirship claims
    2. 2360.02The exclusion of foreign law
    3. 2360.03Divorce decrees in practice
    4. 2360.04Community property
    5. 2360.05Revenue and penal judgments
    6. 2360.06Penal judgments
  8. ¶ 2370Arbitral Awards, Insolvency Orders and Criminal Orders
    1. 2370.01The Arbitration Act 2009
    2. 2370.02Enforcement of awards
    3. 2370.03Awards and section 13D
    4. 2370.04Commercial awards against trustees
    5. 2370.05Privacy of arbitration proceedings in the Cook Islands
    6. 2370.06Foreign insolvency proceedings
    7. 2370.07Bankruptcy court judgments in the United States
    8. 2370.08Receivers
    9. 2370.09Criminal confiscation and mutual assistance
  9. ¶ 2380The LLC and Foundation Firewalls
    1. 2380.01Three statutes, three designs
    2. 2380.02The LLC rule
    3. 2380.03What the LLC rule permits
    4. 2380.04Judgments against the LLC itself
    5. 2380.05The foundation rule
    6. 2380.06The narrower trigger
    7. 2380.07The firewalls compared
    8. 2380.08Combining the vehicles
  10. ¶ 2390The Firewalls Compared and a Planning Checklist
    1. 2390.01Nevis
    2. 2390.02Belize
    3. 2390.03The three jurisdictions compared
    4. 2390.04What the comparison shows
    5. 2390.05Drafting for foreign judgments
    6. 2390.06Checklist

Chapter 24Litigating in the Cook Islands: Procedure, Injunctions, Freezing Orders and Disclosure

  1. ¶ 2401Overview
    1. 2401.01Scope of the chapter
    2. 2401.02Three layers of law
    3. 2401.03The general rule of procedure
    4. 2401.04Who litigates in the Cook Islands
    5. 2401.05The creditor's problem
    6. 2401.06Plan of the chapter
    7. 2401.07Absence of decided cases on some points
  2. ¶ 2410Starting Proceedings in the High Court
    1. 2410.01The court
    2. 2410.02Plaints and applications
    3. 2410.03Choosing the cause of action
    4. 2410.04The section 13K affidavit
    5. 2410.05What section 13K(3) demands
    6. 2410.06When the affidavit must be filed
    7. 2410.07The time rules
    8. 2410.08Parties
    9. 2410.09Representation
  3. ¶ 2420Service in and out of the Cook Islands
    1. 2420.01Service on the structure itself
    2. 2420.02Parties abroad
    3. 2420.03Whether to join the settlor
    4. 2420.04Service of interim orders
    5. 2420.05Service of documents from foreign proceedings
  4. ¶ 2430Interim Injunctions and Mareva Orders
    1. 2430.01The power to grant injunctions
    2. 2430.02The general conditions
    3. 2430.03The statutory overlay
    4. 2430.04Without notice
    5. 2430.05Scope and form
    6. 2430.06Ancillary orders
    7. 2430.07Undertaking and variation
    8. 2430.08Freezing orders in aid of foreign proceedings
  5. ¶ 2440Statutory Limits on Interim Relief Against Cook Islands Structures
    1. 2440.01The pattern
    2. 2440.02International trusts: the threshold and the remedy
    3. 2440.03Orders against the trustee's own assets
    4. 2440.04LLCs: section 45(9)
    5. 2440.05What section 45(9) leaves open
    6. 2440.06Foundations
    7. 2440.07Third parties who hold assets
  6. ¶ 2450Hearing in Private and Confidentiality
    1. 2450.01The trust rule
    2. 2450.02The earlier text
    3. 2450.03The offence of disclosure
    4. 2450.04The LLC rule
    5. 2450.05The foundation rule
    6. 2450.06Effect on the conduct of litigation
  7. ¶ 2460Disclosure: Discovery, Privilege and Third Parties
    1. 2460.01Why disclosure decides these cases
    2. 2460.02Discovery under the Code
    3. 2460.03After 2004
    4. 2460.04LLCs and foundations
    5. 2460.05Legal professional privilege
    6. 2460.06What makes a strong prima facie case
    7. 2460.07Disclosure by non-parties
    8. 2460.08Evidence for and from foreign courts
  8. ¶ 2470Security for Costs, Costs and Settlement
    1. 2470.01The power
    2. 2470.02The statutory link to section 13K
    3. 2470.03The factors
    4. 2470.04Costs
    5. 2470.05The trustee's costs
    6. 2470.06Vexatious litigants
    7. 2470.07Settlement
  9. ¶ 2480Hearings, Evidence, Enforcement and Appeals
    1. 2480.01Evidence by affidavit
    2. 2480.02Witnesses abroad
    3. 2480.03Hearings by telephone and video link
    4. 2480.04Contempt
    5. 2480.05Enforcement of judgments
    6. 2480.06Appeals to the Court of Appeal
    7. 2480.07Stay pending appeal
    8. 2480.08Appeals to the Privy Council
  10. ¶ 2490Practice: A Typical Sequence and Checklists
    1. 2490.01A typical sequence
    2. 2490.02The creditor's checklist
    3. 2490.03The trustee's checklist
    4. 2490.04The settlor's position

Chapter 25Cook Islands Structures Before Foreign Courts: Contempt, Repatriation Orders and Bankruptcy

  1. ¶ 2501Overview
    1. 2501.01The subject of the chapter
    2. 2501.02The two halves of the record
    3. 2501.03What the Cook Islands statute contributes
    4. 2501.04Plan of the chapter
  2. ¶ 2510The Settlor Within Reach: Orders a Foreign Court Can Make
    1. 2510.01Jurisdiction over the person
    2. 2510.02Who seeks the orders
    3. 2510.03The statutory bases
    4. 2510.04The forms of order
    5. 2510.05Orders to produce documents
    6. 2510.06Orders against the trust's officers
    7. 2510.07The settlor's home forum and the Cook Islands forum compared
  3. ¶ 2520Civil Contempt and the Impossibility Defense
    1. 2520.01Civil and criminal contempt
    2. 2520.02The elements
    3. 2520.03Inability as a defense
    4. 2520.04The burden of production
    5. 2520.05The standard in asset protection cases
    6. 2520.06Self-created impossibility
    7. 2520.07The Ninth Circuit's reservation
    8. 2520.08How long confinement lasts
  4. ¶ 2530The Cook Islands Cases
    1. 2530.01The record
    2. 2530.02The settlors' offices
  5. ¶ 2540Other Offshore Trusts Before United States Courts
    1. 2540.01Why the other cases matter
    2. 2540.02Coker
    3. 2540.03Grant: the one success, and its end
    4. 2540.04Chadwick: the family court
    5. 2540.05Brennan: repatriation and the automatic stay
    6. 2540.06A trust funded long before the claim
  6. ¶ 2550The Trust's Side: The Cook Islands Trustee and Protector
    1. 2550.01The request arrives
    2. 2550.02The duress clause
    3. 2550.03Drafting the clause for the trustee
    4. 2550.04Directions from the High Court
    5. 2550.05Distributions during the dispute
    6. 2550.06The protector
    7. 2550.07Records and the settlor's evidence
  7. ¶ 2560The Settlor in Bankruptcy
    1. 2560.01Why bankruptcy matters
    2. 2560.02Property of the estate
    3. 2560.03The ten-year rule of section 548(e)
    4. 2560.04Turnover and contempt
    5. 2560.05Denial of discharge
    6. 2560.06The Rule 2004 examination
    7. 2560.07The automatic stay and government orders
    8. 2560.08The bankruptcy trustee in the Cook Islands
  8. ¶ 2570Divorce, Validity in the Home Forum, Companies and Criminal Exposure
    1. 2570.01The divorce court
    2. 2570.02Planning for the spouse
    3. 2570.03Validity of the self-settled trust in the home forum
    4. 2570.04Cook Islands companies before the foreign court
    5. 2570.05Criminal exposure: concealment
    6. 2570.06Brennan's sequel
  9. ¶ 2580Nevis and Belize Compared
    1. 2580.01The same exposure
    2. 2580.02Nevis
    3. 2580.03Belize
  10. ¶ 2590Planning, Model Provisions and Checklist
    1. 2590.01The lessons of the cases
    2. 2590.02Design
    3. 2590.03Records
    4. 2590.04Administration
    5. 2590.05Conduct after an order
    6. 2590.06Model provisions
    7. 2590.07Checklist

Part VI: Tax, Reporting and AML

Chapter 26Cook Islands Taxation and the International Sector

  1. ¶ 2601Overview
    1. 2601.01Scope of the chapter
    2. 2601.02The two halves of the system
    3. 2601.03What changed in 2019 and after
    4. 2601.04What did not change
    5. 2601.05Plan of the chapter
  2. ¶ 2610The Domestic Tax System: The Income Tax Act 1997
    1. 2610.01The Act and its administration
    2. 2610.02The charge
    3. 2610.03Residence of individuals
    4. 2610.04Residence of companies before 2023
    5. 2610.05Residence of companies from 2023
    6. 2610.06The first limb: control exercised in the Cook Islands
    7. 2610.07The second and third limbs
    8. 2610.08Source
    9. 2610.09Rates
    10. 2610.10Withholding tax
    11. 2610.11Trusts under the general law
    12. 2610.12Other exemptions
    13. 2610.13The Collector's information powers
    14. 2610.14Double taxation and exchange agreements
    15. 2610.15Foreign tax credits
  3. ¶ 2620The Exclusion Provisions in the International Statutes
    1. 2620.01The technique
    2. 2620.02Why the technique matters
    3. 2620.03The International Trusts Act 1984, section 21
    4. 2620.04The 1989 substitution
    5. 2620.05The 1995–96 relocation to section 27B
    6. 2620.06Later changes to the Schedule
    7. 2620.07The Limited Liability Companies Act 2008, section 76
    8. 2620.08The Foundations Act 2012, section 87
    9. 2620.09The International Companies Act 1981-82, sections 249 and 250
  4. ¶ 2630The International Trust
    1. 2630.01The basic position
    2. 2630.02"On an international trust"
    3. 2630.03The 2017 foreign trust rules
    4. 2630.04What the rules do
    5. 2630.05Relation to section 27B
    6. 2630.06Record-keeping by resident trustees of foreign trusts
    7. 2630.07Two meanings of residence
    8. 2630.08Resident beneficiaries
    9. 2630.09The settlor
    10. 2630.10The trustee company
  5. ¶ 2640The International Company and the 2019 and 2021 Reforms
    1. 2640.01Why the international company matters to trust planning
    2. 2640.02The 2017 assessment
    3. 2640.03The International Companies (Removal of Tax Exemption) Amendment Act 2019
    4. 2640.04The transitional provision
    5. 2640.05International companies after 2021: residence
    6. 2640.06Dividends and interest paid by an international company
    7. 2640.07Planning after the reforms
  6. ¶ 2650The Limited Liability Company and the Foundation
    1. 2650.01The limited liability company
    2. 2650.02Was the limited liability company affected by the 2019 reforms?
    3. 2650.03The reviews and the limited liability company
    4. 2650.04The member's position
    5. 2650.05The foundation
    6. 2650.06Who may form a foundation
    7. 2650.07The unused power to regulate the taxation of foundations
    8. 2650.08Foundations, trusts and limited liability companies compared
  7. ¶ 2660Value Added Tax and Other Taxes
    1. 2660.01Value added tax
    2. 2660.02International entities and value added tax
    3. 2660.03Place of supply
    4. 2660.04Zero-rating of services to non-residents
    5. 2660.05Whose services, to whom?
    6. 2660.06Departure tax and customs
    7. 2660.07Taxes not found
  8. ¶ 2670International Reviews: The European Union, the OECD and the Global Forum
    1. 2670.01Three separate processes
    2. 2670.02The European Union list
    3. 2670.03The regimes assessed
    4. 2670.04The Income Tax Act's link to the European Union list
    5. 2670.05The Global Forum: exchange of information on request
    6. 2670.06What the rating means for a structure
    7. 2670.07The Common Reporting Standard
    8. 2670.08The 2016 Act and the exclusion provisions
    9. 2670.09The limit of the 2016 amendment
    10. 2670.10Economic substance
  9. ¶ 2680Foreign Tax Claims: The Revenue Rule in the Cook Islands
    1. 2680.01The question
    2. 2680.02The rule and section 13D
    3. 2680.03What the rule does not do
    4. 2680.04Penal and public laws
  10. ¶ 2690Comparisons, Drafting and a Checklist
    1. 2690.01Nevis
    2. 2690.02Belize
    3. 2690.03Choosing among Cook Islands vehicles for tax reasons
    4. 2690.04Using the model provision
    5. 2690.05Checklist

Chapter 27Information Exchange: Tax Information Exchange Agreements, FATCA and the Common Reporting Standard

  1. ¶ 2701Overview
    1. 2701.01Scope of the chapter
    2. 2701.02The statutory base
    3. 2701.03The position in 2026
    4. 2701.04Why it matters to the planner
  2. ¶ 2710The Legal Architecture
    1. 2710.01Section 86 before 2016
    2. 2710.02The 2016 substitution
    3. 2710.03Part VIA
    4. 2710.04Section 96C
    5. 2710.05The Revenue Management Division's secrecy provision
    6. 2710.06The information powers
    7. 2710.07The schedules of applicable enactments
  3. ¶ 2720The Treaty Network
    1. 2720.01No comprehensive double taxation treaty
    2. 2720.02The bilateral agreements of 2009
    3. 2720.03Later agreements
    4. 2720.04The terms of a tax information exchange agreement
    5. 2720.05The Multilateral Convention
    6. 2720.06The Multilateral Competent Authority Agreement
  4. ¶ 2730Exchange on Request: The Collector's Powers and the Trustee Company
    1. 2730.01The competent authority
    2. 2730.02Inspection: section 219
    3. 2730.03Production: section 220
    4. 2730.04The right to apply to the High Court
    5. 2730.05Inquiry before a judge: section 221
    6. 2730.06No duty to notify the person concerned
    7. 2730.07The trustee company's own position
    8. 2730.08LLCs and foundations
  5. ¶ 2740Global Forum Peer Reviews
    1. 2740.01Membership and the standards
    2. 2740.02The first-round review
    3. 2740.03The second-round review
    4. 2740.04Reasons for the reforms
    5. 2740.05The automatic exchange reviews
    6. 2740.06The ratings and the European Union list
  6. ¶ 2750FATCA Without an Intergovernmental Agreement
    1. 2750.01The statute
    2. 2750.02The Cook Islands has no intergovernmental agreement
    3. 2750.03Consequences of having no agreement
    4. 2750.04Which Cook Islands entities are financial institutions
    5. 2750.05Sponsored investment entities
    6. 2750.06Owner-documented FFIs
    7. 2750.07Non-financial entities
    8. 2750.08Cook Islands law and direct reporting to the Service
  7. ¶ 2760The Common Reporting Standard: Part VIA and the 2017 Regulations
    1. 2760.01The regulations
    2. 2760.02Cook Islands financial institutions
    3. 2760.03Due diligence
    4. 2760.04Reporting
    5. 2760.05Discretionary beneficiaries
    6. 2760.06Pre-existing entity accounts and thresholds
    7. 2760.07Penalties, reasonable excuse and anti-avoidance
    8. 2760.08Non-resident institutions and their agents
    9. 2760.09The exchange lists
  8. ¶ 2770Classifying Trusts, LLCs and Foundations Under the CRS and FATCA
    1. 2770.01Two classifications, one analysis
    2. 2770.02Where a trust is resident
    3. 2770.03Controlling persons and equity interests
    4. 2770.04Foundations
    5. 2770.05LLCs
    6. 2770.06Changes of circumstances
  9. ¶ 2780The Secrecy Provisions and Their Limits
    1. 2780.01The structure statutes
    2. 2780.02The 2004 substitution
    3. 2780.03The Income Tax Act overrides
    4. 2780.04The Commission's override
    5. 2780.05Information received from abroad
    6. 2780.06Records of foreign trusts: section 217A
    7. 2780.07The confidentiality of exchanged information
    8. 2780.08What remains confidential
  10. ¶ 2790Planning, a Model Provision and a Checklist
    1. 2790.01Planning on the footing of full reporting
    2. 2790.02Information for the trustee company
    3. 2790.03Drafting the deed
    4. 2790.04Foundations and LLCs
    5. 2790.05Checklist

Chapter 28Anti-Money Laundering, Beneficial Ownership and Due Diligence

  1. ¶ 2801Overview
    1. 2801.01The subject of the chapter
    2. 2801.02The text of the 2017 Act
    3. 2801.03The structure of the regime
    4. 2801.04The term "ultimate principal."
    5. 2801.05Where beneficial-ownership information sits
    6. 2801.06Why it matters to the planner
    7. 2801.07Plan of the chapter
  2. ¶ 2810The Legislative Framework
    1. 2810.01Four statutes on financial transactions reporting
    2. 2810.02Purpose and key terms
    3. 2810.03The oversight Acts
    4. 2810.04The December 2017 amendments
    5. 2810.05The 2017 Regulations
    6. 2810.06The 2024 amendment
    7. 2810.07Practice guidelines
    8. 2810.08The consequential amendments
  3. ¶ 2820Reporting Institutions and Specified Activities
    1. 2820.01Three routes into the Act
    2. 2820.02Licensed financial institutions
    3. 2820.03Specified activities: the trust and company service limb
    4. 2820.04Lawyers and accountants
    5. 2820.05The extent of application
    6. 2820.06Monitored transactions
    7. 2820.07Small practices and exemptions
    8. 2820.08The client is outside the definition
  4. ¶ 2830The Compliance Programme, the Reporting Officer and Risk Assessment
    1. 2830.01The compliance programme
    2. 2830.02The Money Laundering Reporting Officer
    3. 2830.03The trustee company's compliance officer
    4. 2830.04Group policy, testing, staff and training
    5. 2830.05The business risk assessment
    6. 2830.06The customer risk assessment
    7. 2830.07Risks the Unit associates with trustee companies
    8. 2830.08Compliance supervision
  5. ¶ 2840Customer Due Diligence
    1. 2840.01When due diligence is required
    2. 2840.02Who is identified
    3. 2840.03Standard due diligence
    4. 2840.04The identification information
    5. 2840.05Certified copies
    6. 2840.06When due diligence cannot be completed
    7. 2840.07Simplified due diligence is unavailable for trusts and foundations
    8. 2840.08Delayed verification
    9. 2840.09Enhanced due diligence
    10. 2840.10Lists A and B
    11. 2840.11Politically exposed persons
    12. 2840.12Ongoing due diligence and existing customers
    13. 2840.13Reliance on third parties
  6. ¶ 2850Beneficial Ownership: The Ultimate Principal of Trusts, Companies and Foundations
    1. 2850.01The statutory definition
    2. 2850.02Legal persons
    3. 2850.03Legal arrangements
    4. 2850.04The additional requirements for trusts and foundations
    5. 2850.05Benefits that are not called distributions
    6. 2850.06Applying the rules to each vehicle
    7. 2850.07Bearer shares and nominees
    8. 2850.08Where the information sits and who can obtain it
    9. 2850.09The Global Forum and the reform programme
    10. 2850.10Comparison with Nevis
  7. ¶ 2860Records, Reporting and Tipping Off
    1. 2860.01What must be kept
    2. 2860.02For how long
    3. 2860.03Form and location
    4. 2860.04Cash transaction reports
    5. 2860.05Funds-transfer reports
    6. 2860.06Suspicious activity reports
    7. 2860.07Form, follow-up and further information
    8. 2860.08No consent procedure
    9. 2860.09Tipping off
  8. ¶ 2870Offences, Secrecy, Privilege and Protection
    1. 2870.01The prohibitions
    2. 2870.02Penalties
    3. 2870.03Directors and officers
    4. 2870.04Offences that reach the client
    5. 2870.05Primacy over secrecy
    6. 2870.06Legal professional privilege
    7. 2870.07Protection for good-faith compliance
    8. 2870.08Information to foreign authorities
  9. ¶ 2880International Standards and Reviews
    1. 2880.01The standard the Act implements
    2. 2880.02Membership and evaluation
    3. 2880.03The tax transparency review
    4. 2880.04Why the reviews matter to the client
    5. 2880.05Comparison with Nevis
    6. 2880.06The AsiaTrust proceedings
  10. ¶ 2890Practice: Onboarding a Cook Islands Structure
    1. 2890.01Two sets of formation requirements
    2. 2890.02The onboarding sequence
    3. 2890.03Explaining confidentiality to the client
    4. 2890.04Additions, distributions and benefits
    5. 2890.05Changes of trustee company
    6. 2890.06Model provisions
    7. 2890.07Checklist

Chapter 29U.S. Tax and Reporting for Cook Islands Trusts, LLCs and Foundations

  1. ¶ 2901Overview
    1. 2901.01Scope
    2. 2901.02Why the chapter matters to Cook Islands planning
    3. 2901.03The three questions
    4. 2901.04The typical structures
    5. 2901.05Sources and currency
    6. 2901.06Persons who are "United States persons."
    7. 2901.07Two residence tests that must not be confused
  2. ¶ 2910Is the Cook Islands Trust Foreign? The Court and Control Tests
    1. 2910.01The statutory definition
    2. 2910.02The court test
    3. 2910.03Duress and flight provisions
    4. 2910.04The control test
    5. 2910.05Protectors
    6. 2910.06Inadvertent changes of residence
    7. 2910.07Why foreign status is the starting point
  3. ¶ 2920The U.S. Settlor: Grantor-Trust Status, Sections 677 and 679, and Section 684
    1. 2920.01The grantor-trust rules
    2. 2920.02Section 677 and the self-settled Cook Islands trust
    3. 2920.03Section 679: foreign trusts with American beneficiaries
    4. 2920.04Section 679 in practice
    5. 2920.05Loans and the use of trust property
    6. 2920.06Section 684: gain on transfers to foreign trusts
    7. 2920.07The trust as a grantor trust: consequences for the deed
    8. 2920.08Migrating an American trust to the Cook Islands
    9. 2920.09Automatic migration provisions in American trusts
  4. ¶ 2930Foreign Settlors and U.S. Beneficiaries: Section 672(f), Distributions, Throwback and Loans
    1. 2930.01Foreign grantors
    2. 2930.02Foreign grantor trusts
    3. 2930.03Distributions from foreign nongrantor trusts
    4. 2930.04Throwback and the interest charge
    5. 2930.05Loans and use of property
    6. 2930.06The settlor's death: the second phase
    7. 2930.07Domestication
    8. 2930.08Immigrants and the five-year rule
  5. ¶ 2940Forms 3520 and 3520-A and the Section 6677 Penalties
    1. 2940.01The structure of section 6048
    2. 2940.02Reportable events
    3. 2940.03The owner's obligations and Form 3520-A
    4. 2940.04The United States agent
    5. 2940.05Beneficiaries' obligations
    6. 2940.06Foreign gifts
    7. 2940.07Due dates
    8. 2940.08Annual statements
    9. 2940.09The trustee's duty to provide information, and section 23
    10. 2940.10The section 6677 penalties
  6. ¶ 2950Cook Islands LLCs: Reporting Driven by Classification
    1. 2950.01Classification decides the returns
    2. 2950.02The disregarded Cook Islands LLC
    3. 2950.03The Cook Islands LLC classified as a partnership
    4. 2950.04The Cook Islands LLC that remains a corporation
    5. 2950.05Choosing the classification for a trust-owned LLC
    6. 2950.06Payments of members' tax
    7. 2950.07After the settlor's death
    8. 2950.08Foreign owners of American LLCs
  7. ¶ 2960Foundations: Trust or Business Entity
    1. 2960.01No special rule
    2. 2960.02The features of a Cook Islands foundation that bear on classification
    3. 2960.03Applying Rost to the Cook Islands foundation
    4. 2960.04Consequences of trust classification
    5. 2960.05Founder's rights and grantor-trust status
    6. 2960.06Consequences of entity classification
    7. 2960.07Foundations for foreign families
  8. ¶ 2970Accounts and Assets: FBAR, Form 8938 and PFICs
    1. 2970.01The FBAR obligation
    2. 2970.02Financial interest through a Cook Islands trust or LLC
    3. 2970.03What is a foreign financial account
    4. 2970.04Signature authority, managers, council members and protectors
    5. 2970.05Due date and penalties
    6. 2970.06Form 8938
    7. 2970.07Form 8938 and Cook Islands structures
    8. 2970.08The view from the other side: FATCA reporting
    9. 2970.09Passive foreign investment companies
  9. ¶ 2980Gift, Estate and Expatriation Taxes
    1. 2980.01Income tax and transfer tax are separate questions
    2. 2980.02Gift completeness
    3. 2980.03Creditor access and the Cook Islands protections
    4. 2980.04Estate inclusion: sections 2036 and 2038
    5. 2980.05Discretion, tax reimbursement and implied understandings
    6. 2980.06Choosing inclusion or exclusion
    7. 2980.07Foundations and the transfer taxes
    8. 2980.08Nonresident alien settlors and situs
    9. 2980.09Gifts by nonresident aliens
    10. 2980.10Expatriation
  10. ¶ 2990Penalties, Limitations, Remediation and a Checklist
    1. 2990.01The penalties together
    2. 2990.02The open limitations period
    3. 2990.03Reasonable cause
    4. 2990.04First-time abatement
    5. 2990.05Contesting a penalty
    6. 2990.06Remediation
    7. 2990.07Returns by structure
    8. 2990.08Allocating responsibility
    9. 2990.09Checklist

Part VII: Planning and Forms

Chapter 30Designing a Cook Islands Structure: Trust, LLC and Foundation Combinations and a Drafting Guide

  1. ¶ 3001Overview
    1. 3001.01Scope of the chapter
    2. 3001.02What the chapter does not repeat
    3. 3001.03The statutes
    4. 3001.04The status of the proposed LLC revisions
    5. 3001.05How to use the chapter
  2. ¶ 3010The Design Questions
    1. 3010.01Objectives first
    2. 3010.02Who the client is and where the family lives
    3. 3010.03The client's home law
    4. 3010.04Solvency and creditors
    5. 3010.05The assets
    6. 3010.06Control
    7. 3010.07Tax and reporting
  3. ¶ 3020The Building Blocks Compared
    1. 3020.01Four vehicles
    2. 3020.02Protection from the settlor's or founder's creditors
    3. 3020.03Succession
    4. 3020.04Privacy
    5. 3020.05Familiarity abroad
    6. 3020.06A decision path
  4. ¶ 3030The International Trust Holding a Cook Islands LLC
    1. 3030.01The pattern
    2. 3030.02Why add the LLC
    3. 3030.03Who manages the company
    4. 3030.04Authority over property
    5. 3030.05Membership and assignment
    6. 3030.06Distributions
    7. 3030.07Where the trust's protection begins and the LLC's ends
    8. 3030.08United States classification
    9. 3030.09Several companies
  5. ¶ 3040The Foundation Holding an LLC
    1. 3040.01The pattern
    2. 3040.02Why the LLC is needed
    3. 3040.03Strengths of the pattern
    4. 3040.04Weaknesses of the pattern
    5. 3040.05Founder's rights
    6. 3040.06The council and the LLC's management
    7. 3040.07The enforcer
  6. ¶ 3050Trusts and Foundations Together
    1. 3050.01Three ways to combine them
    2. 3050.02Side by side
    3. 3050.03The trust above the foundation
    4. 3050.04The foundation above the trust: an obstacle
    5. 3050.05The foundation as trustee
    6. 3050.06Purpose trusts and purpose foundations
  7. ¶ 3060An International Company Within the Structure
    1. 3060.01The roles it plays
    2. 3060.02Residence and tax
    3. 3060.03The LLC as the default holding vehicle
    4. 3060.04The international company as trustee
    5. 3060.05The international company as a conduit for a foundation
  8. ¶ 3070Drafting Guide: The International Trust Deed
    1. 3070.01Method
    2. 3070.02Parties, recitals and the declaration of trust
    3. 3070.03The beneficial provisions
    4. 3070.04The trustee provisions
    5. 3070.05The protector and the event of duress
    6. 3070.06Governing law, forum and registration
    7. 3070.07Proceedings and foreign orders
    8. 3070.08Variation, migration and termination
  9. ¶ 3080Drafting Guide: The Operating Agreement and the Foundation Rules
    1. 3080.01The operating agreement of a trust-owned or foundation-owned LLC
    2. 3080.02Management, managers and compulsion
    3. 3080.03Distributions, capital and continuity
    4. 3080.04Duties, indemnity and the gaps in the Act
    5. 3080.05The foundation instrument and the rules
    6. 3080.06Objects, beneficiaries and default rules
    7. 3080.07Aligning the instruments
  10. ¶ 3090Implementation, Maintenance and a Master Checklist
    1. 3090.01The order of steps
    2. 3090.02Funding in stages
    3. 3090.03Renewals and filings
    4. 3090.04Reporting
    5. 3090.05Review on events
    6. 3090.06Master checklist
    7. 3090.07Faults found on review

Appendices

Appendix AForm of International Trust Deed

  1. ¶ A01Introduction and Use of the Form
    1. A01.01Purpose
    2. A01.02How the form is built
    3. A01.03Conventions
    4. A01.04The assumed facts
    5. A01.05Order of signing and funding
    6. A01.06Registration before funding
    7. A01.07What the form does not contain
  2. ¶ A10The Deed
    1. A10.01Parties and recitals
    2. A10.02Clause 1: definitions and interpretation
    3. A10.03Clause 2: name, declaration, governing law and forum
    4. A10.04Clause 3: the Trust Fund and additions
    5. A10.05Clause 4: the Beneficiaries
    6. A10.06Clause 5: the discretionary trusts
    7. A10.07Clause 6: spendthrift and protective provisions
    8. A10.08Clause 7: the Trust Period and the default trusts
    9. A10.09Clause 8: the Trustee's powers
    10. A10.10Clause 9: the Trustees
    11. A10.11Clause 10: the Protector
    12. A10.12Clause 11: the Settlor
    13. A10.13Clause 12: the Event of Duress
    14. A10.14Clause 13: change of governing law and place of administration
    15. A10.15Clause 14: variation
    16. A10.16Clause 15: foreign judgments, foreign proceedings and claims
    17. A10.17Clause 16: validity and foreign law
    18. A10.18Clause 17: confidentiality and information
    19. A10.19Clause 18: tax reporting and information exchange
    20. A10.20Clause 19: financial crime compliance
    21. A10.21Clause 20: liability and indemnity of the Trustee
    22. A10.22Clause 21: remuneration
    23. A10.23Clause 22: registration, records and accounts
    24. A10.24Clause 23: termination
    25. A10.25Clause 24: general provisions and execution
  3. ¶ A20Commentary
    1. A20.01Scope of the commentary
    2. A20.02Clauses 1 and 4: the non-residence condition
    3. A20.03Clause 4: entities as beneficiaries
    4. A20.04Clause 2: governing law and forum
    5. A20.05Clause 3: funding and the fraudulent-disposition rules
    6. A20.06Clauses 4 and 5: the settlor as beneficiary
    7. A20.07Clause 6: spendthrift and protective provisions
    8. A20.08Clause 7: the Trust Period and the default gift
    9. A20.09Clause 8: underlying companies
    10. A20.10Clause 9: the Trustees
    11. A20.11Clause 10: the Protector
    12. A20.12Clause 11: the settlor
    13. A20.13Clause 12: duress
    14. A20.14Clause 13: change of governing law
    15. A20.15Clauses 7.1 and 14: variation and the fraud-on-a-power rule
    16. A20.16Clause 15: foreign judgments and the conduct of claims
    17. A20.17Clause 16: validity and foreign law
    18. A20.18Clause 17: confidentiality
    19. A20.19Clauses 18 and 19: reporting and compliance
    20. A20.20Clause 20: liability
    21. A20.21Clause 22: renewal
  4. ¶ A30Schedules
    1. A30.01The schedules
    2. A30.02Schedule 1: the initial Trust Fund
    3. A30.03Schedule 2: letter of wishes
    4. A30.04Schedule 3: Protector's acceptance
    5. A30.05Schedule 4: Trustee's acceptance and certificate
    6. A30.06Schedule 5: Settlor's declaration of solvency
    7. A30.07Schedule 6: particulars for registration
    8. A30.08What registration produces

Appendix BForm of Cook Islands LLC Operating Agreement (Single-Member and Multi-Member)

  1. ¶ B01Overview
    1. B01.01Purpose of the appendix
    2. B01.02How the forms were built
    3. B01.03The operating agreement under the Act
    4. B01.04Why the agreement must be in writing
    5. B01.05The articles of organisation
    6. B01.06Choices in brackets
    7. B01.07The defaults the forms displace
    8. B01.08Rules the forms cannot change
    9. B01.09The pending proposal
    10. B01.10United States tax
  2. ¶ B10Form 1: Single-Member Operating Agreement
    1. B10.01Use of the form
    2. B10.02Title, date and parties
    3. B10.03Article 1: Definitions and interpretation
    4. B10.04Article 2: The Company
    5. B10.05Article 3: The Member and the Interest
    6. B10.06Article 4: Capital
    7. B10.07Article 5: Management
    8. B10.08Article 6: Duties, conflicts and indemnity
    9. B10.09Article 7: Distributions
    10. B10.10Article 8: Creditors of the Member
    11. B10.11Article 9: Continuity and succession
    12. B10.12Article 10: Assignment and resignation
    13. B10.13Article 11: Records, accounts, information and confidentiality
    14. B10.14Article 12: Dissolution and winding up
    15. B10.15Article 13: Transfer of domicile
    16. B10.16Article 14: United States tax classification and information
    17. B10.17Article 15: Amendment, governing law and general
  3. ¶ B20Form 2: Multi-Member Operating Agreement
    1. B20.01Use of the form
    2. B20.02How Form 2 is built
    3. B20.03Article 3: Members, Interests and admission
    4. B20.04Article 4: Capital and capital accounts
    5. B20.05Article 5: Management (clauses 5.1 to 5.4)
    6. B20.06Article 7: Allocations and distributions
    7. B20.07Article 9: Continuity and succession
    8. B20.08Article 10: Transfers, resignation and expulsion
    9. B20.09Article 12: Dissolution and deadlock
    10. B20.10Article 14: United States tax classification
  4. ¶ B30Commentary
    1. B30.01Article 1 and the written agreement
    2. B30.02The parties
    3. B30.03A foundation as member
    4. B30.04Article 2: the company and its registered agent
    5. B30.05Article 3: the member and the interest
    6. B30.06Article 4: capital
    7. B30.07Clauses 5.1 to 5.4: management
    8. B30.08Clause 5.5: instruments affecting property
    9. B30.09Clause 5.6: place of management
    10. B30.10Clause 5.8: compelled Instructions
    11. B30.11Article 6: duties, conflicts and indemnity
    12. B30.12Article 7: distributions
    13. B30.13Article 8: creditors of the member
    14. B30.14Article 9: continuity
    15. B30.15Article 10: assignment and resignation
    16. B30.16Article 11: records, accounts and information
    17. B30.17Article 12: dissolution
    18. B30.18Article 13: transfer of domicile
    19. B30.19Article 14: United States classification
    20. B30.20Article 15: amendment and governing law
    21. B30.21Form 2: decisions and allocations
    22. B30.22Form 2: transfers and expulsion
    23. B30.23Form 2: deadlock and dissolution
    24. B30.24Form 2: partnership classification
  5. ¶ B40Schedules
    1. B40.01Use of the schedules
    2. B40.02Schedule 1: Member, contributions and interests
    3. B40.03Schedule 2: The Manager
    4. B40.04Schedule 3: Successors
    5. B40.05Schedule 4: Matters requiring consent
    6. B40.06Schedule 5: Joinder
    7. B40.07Schedule 6: Written resolutions and consents
    8. B40.08Schedule 7: United States tax matters
    9. B40.09Before execution

Appendix CForm of Foundation Instrument and Foundation Rules

  1. ¶ C01Overview
    1. C01.01Purpose of the appendix
    2. C01.02Why the Act's own terms are used
    3. C01.03How the forms were built
    4. C01.04Two documents, one public
    5. C01.05Assumed facts
    6. C01.06No residence requirement
    7. C01.07The defaults the forms displace
    8. C01.08The rules the forms cannot change
    9. C01.09Currency
    10. C01.10Order of establishment
  2. ¶ C10Form 1: The Foundation Instrument
    1. C10.01Use of the form
    2. C10.02The form
    3. C10.03Matters to keep out of the instrument
  3. ¶ C20Form 2: The Foundation Rules
    1. C20.01Use of the form
    2. C20.02Title and recitals
    3. C20.03Article 1: Definitions and interpretation
    4. C20.04Article 2: Objects, Beneficiaries and Default Beneficiary
    5. C20.05Article 3: Endowment and dedication
    6. C20.06Article 4: The Council
    7. C20.07Article 5: The Enforcer
    8. C20.08Article 6: The Registered Agent
    9. C20.09Article 7: The Founder
    10. C20.10Article 8: Distributions and benefits
    11. C20.11Article 9: Investment, the Holding Company and trading
    12. C20.12Article 10: Information and confidentiality
    13. C20.13Article 11: Liability, indemnity and insurance
    14. C20.14Article 12: Foreign proceedings and Compelled Instructions
    15. C20.15Article 13: Governing law and forum
    16. C20.16Article 14: Records, accounts and annual compliance
    17. C20.17Article 15: Amendment
    18. C20.18Article 16: Term, revocation and winding up
    19. C20.19Article 17: Transfer of registration
    20. C20.20Article 18: Fees and expenses
    21. C20.21Article 19: Approval and execution
  4. ¶ C30Commentary
    1. C30.01Scope of the commentary
    2. C30.02The protective provisions
    3. C30.03Where the Act is narrower than the trust statute
    4. C30.04What the forms do about it
    5. C30.05The founder's control
    6. C30.06The forms with a trust or a company
    7. C30.07Tax and reporting
    8. C30.08Questions before signing
  5. ¶ C40Schedules
    1. C40.01Schedule 1: The Registrar's forms
    2. C40.02Schedule 2: Letter of wishes
    3. C40.03Schedule 3: Council Member's acceptance
    4. C40.04Schedule 4: Enforcer's acceptance
    5. C40.05Schedule 5: Dedication and declaration of solvency

Appendix DRegistration, Filing and Annual-Compliance Checklists

  1. ¶ D01How to Use the Checklists
    1. D01.01Purpose
    2. D01.02Arrangement
    3. D01.03Fees and currencies
    4. D01.04What the checklists do not do
  2. ¶ D10Forming and Registering an International Trust
    1. D10.01The sequence
    2. D10.02Late application
    3. D10.03What the register shows
    4. D10.04Fees
    5. D10.05A trust moving to the Cook Islands
  3. ¶ D20Forming a Cook Islands LLC
    1. D20.01The sequence
    2. D20.02Refusal
    3. D20.03Records the company must keep
    4. D20.04Fees
  4. ¶ D30Establishing a Foundation
    1. D30.01The sequence
    2. D30.02What becomes public
    3. D30.03Records
    4. D30.04Fees
  5. ¶ D40The Annual Cycle: Renewal, Suspension and Deregistration
    1. D40.01One renewal a year
    2. D40.02The international trust: renewal checklist
    3. D40.03Deregistration of a trust
    4. D40.04The LLC: suspension and its limit
    5. D40.05The foundation
    6. D40.06Continuing obligations
  6. ¶ D50Trustee Company Due Diligence and Records
    1. D50.01Why the trustee company carries the file
    2. D50.02Institution-level duties
    3. D50.03Formation checklist for each client
    4. D50.04Records and reports
    5. D50.05During the life of the structure
  7. ¶ D60Information Reporting: CRS, FATCA and the Collector
    1. D60.01Classification first
    2. D60.02The annual CRS checklist
    3. D60.03FATCA
    4. D60.04Requests from the Collector
  8. ¶ D70United States Filings
    1. D70.01Scope
    2. D70.02The trustee company's checklist
  9. ¶ D80Change Events: Agents, Trustees, Migration and Ending
    1. D80.01Events that need a filing
    2. D80.02What cannot be done
    3. D80.03Before a transfer of domicile out
  10. ¶ D90Master Calendar
    1. D90.01Two kinds of date
    2. D90.02Lead times

Appendix EComparative Table: The Cook Islands, Nevis and Belize

  1. ¶ E01How to Use the Tables
    1. E01.01Purpose
    2. E01.02Sources
    3. E01.03Citation
    4. E01.04Proposals
  2. ¶ E10Legal System, Courts and Regulators
    1. E10.01The three systems
    2. E10.02The final court
  3. ¶ E20Trusts
    1. E20.01Common ground
    2. E20.02Who must be non-resident
    3. E20.03The protector
    4. E20.04Duress and change of governing law
  4. ¶ E30Creditor Protection
    1. E30.01Two models
    2. E30.02The Cook Islands time rules
    3. E30.03The bond and the threshold
    4. E30.04LLCs and foundations
  5. ¶ E40LLCs
    1. E40.01The charging order
    2. E40.02Defaults on bankruptcy and death
    3. E40.03Tax payments
    4. E40.04Gaps in the Cook Islands Act
  6. ¶ E50Foundations
    1. E50.01Different designs
    2. E50.02The public register
    3. E50.03Creditor protection compared with the trust
  7. ¶ E60Tax, Information Exchange and Beneficial Ownership
    1. E60.01Exemptions
    2. E60.02Information
  8. ¶ E70Notes on the Cells
    1. E70.01Cells marked "Not examined here."
    2. E70.02Cook Islands statutes
    3. E70.03Belize section 7(6)(c)
    4. E70.04The Cook Islands proposal
    5. E70.05Currency and dates