Overview of the LLC Act

A Cook Islands LLC may be formed to conduct any lawful business in any part of the world.  Once incorporated, a Cook Islands LLC is a separate legal entity with separate rights and liabilities distinct from its members and managers.

A Cook Islands LLC may be incorporated by a single member or by multiple members. 

The LLC may be managed by the Members or by a Manager (who does not have to be a Member).  Corporations may be Members or Managers of the LLC.

The LLC must have a Cook Islands registered agent but the Members and Manager(s) of the LLC may be individuals or entities of any nationality or domicile.

The LLC is exempt from any form of taxation in the Cook Islands.

Incorporation & Operating Agreements

A Cook Islands LLC is incorporated by a trustee company lodging Articles of Organization with the Registrar of LLCs.  The articles of organization are very simple and need only set forth the name of the LLC, the name and business address of the registered agent in the Cook Islands and the period of duration of the LLC (which may be perpetual).

The Operating Agreement of the LLC governs the rights, duties, limitations, qualifications and relations among the members and managers of the LLC.  The provisions of the Operating Agreement will override any provision of the Act except certain matters such as a member’s right of access to books or records, any reduction in the standard of care owed by a Manager under the Act and any filing requirement under the Act.  An Operating Agreement may be specifically tailored to the particular business requirements of the LLC.

Filings, records and accounts

There is a requirement to file a very simple annual return with the Registrar setting out the name of the LLC and the address of the registered agent.

The following records must be kept by the registered agent:

• Current list of the full name and address of each Member and Manager

• A copy of the Articles of Organization and Operating Agreement

Other records may be kept anywhere else in the world.

There is no requirement to prepare accounts or to appoint an auditor.

Asset Protection Features

The sole remedy available to a creditor of a Member in respect of the Member’s interest in the LLC is a charging order against the Member’s interest.  A charging order only entitles the creditor to receive any distributions from the LLC if and when made to the Member by the LLC.  The Act also specifically states that no membership rights may pass to a creditor of a Member.

The effect of this is that any creditor of a Member is effectively prevented from attacking the assets in the LLC.

Even where a charging order is granted, the Act states that the creditor shall have no right to:

• Interfere with the management of the LLC (including any sale of assets)

• Liquidate or seize the assets of the LLC

• Restrict the business of the LLC in any way

• Dissolve the LLC

No interlocutory judgment obtained outside the Cook Islands may be enforced against a Cook Islands LLC.

Any judgment obtained outside the Cook Islands which affects the rights of Members in the LLC cannot be enforced in the Cook Islands.

Members and Managers of an LLC cannot be personally liable for any debt, obligation or liability of the LLC.

Dissolution

A Cook Islands LLC is dissolved by the unanimous written agreement of all partners or otherwise on the date specified in the Operating Agreement (if any).

When a decision is taken to dissolve an LLC, a simplified statement of intent to dissolve is filed with the Registrar.

Once dissolution is complete, Articles of Dissolution are filed with the Registrar at which time the LLC ceases to exist.

Transfer of Domicile

The LLC Act provides for the transfer of foreign LLCs to the Cook Islands and for the transfer of Cook Islands LLCs to other jurisdictions.  Details of these procedures are available on request.

Pass-through entity

A Cook Islands LLC may be treated as a pass-through entity for the purposes of the United States Internal Revenue Code.

Privacy

The LLC Act has provisions which prohibit the release of confidential information by a Manager or Member of the LLC.

Court proceedings in relation to an LLC in the Cook Islands are held in camera and any decision which is publicly reported must be edited to preserve the confidentiality of the identity of the LLC and every Member and Manager of the LLC.