Cook Island types of company:

Cook Islands Domestic Limited Company:

Domestic companies are companies which trade locally or have local shareholders. All domestic companies must obtain a business licence under the Development Investment Act 1976 for which an annual fee is payable depending on the type of licence required. There are 2 types of domestic companies, resident domestic companies and non resident domestic companies, a distinction which is only relevant for the purposes of taxation.

Cook Islands International Business Company:

The "International Company" is the most commonly used offshore entity. The law governing International Companies is set out in the International Companies Act 1981-2. Residents of the Cook Islands are prohibited from holding a beneficial interest in an International Company. By way of exception International Companies do not need a licence under the Development Investment Act 1995-6 to operate a business on the Islands, unless the business is in the field of banking or insurance.

As of October, 2004, there were about 800 International Companies in the Islands.

The following are the key characteristics of the International Company:

An International Company must file an annual return and must keep details in its registered office of the directors, shareholders, company secretary and charges in addition to the company's books and its seal;

Bearer shares and bearer debentures can be issued; there is no minimum share capital requirement and shares of no par value are permitted;

An International Company may purchase some or all of its own shares or reduce its own share capital without the need for a court order;

Sole shareholders and directors are permitted; directors may be corporate or non-resident;

The company secretary must be a trust company registered in the Cook Islands; Accounts need not be filed or audited unless the company holds an offshore banking or insurance licence;

No stamp duty is charged on corporate documents

There is no requirement to hold annual general meetings;

Foreign companies may re-domicile in the Cook Islands as International Companies, and local companies may migrate to other jurisdictions;

The articles of association of an International Company can be drafted so as to allow for the membership interest of any shareholder to be vested automatically in a specified person upon the occurrence of a specified event (e.g. death or bankruptcy);

An International Company can be incorporated using a foreign name, and the shares in an International Company can be issued in foreign currencies; There is no legal requirement to file shareholder details in the public registry either during incorporation of the company or in subsequent annual returns.

Cook Islands Registered Listed Company:

A Registered Listed Company is a foreign company that is quoted on an approved and recognized stock exchange and that has re-registered on the Cook Islands as an International Company under the International Companies Act 1981-2.

The records pertaining to a Registered Listed Company at the Companies Registry are open to public inspection. The Monetary Board also has substantial powers to inspect such a Company's records wherever they may be.

The normal freedom of International Companies to buy back and reduce their share capital is not available to Registered Listed Companies, which need the permission of the Court for a capital reduction.

Cook Islands Foreign Company:

A Foreign Company is a company incorporated in a foreign jurisdiction which has re-registered in the Cook Islands as an International Company under the International Companies Act 1981-2.

Normally, a foreign company wishing to do business from the Islands must re-register there unless it is simply involved in a one-off offshore transaction which will be completed within 31 days. Once re-registered, the Foreign Company is allowed to have a physical place of business on the Islands, and it does not need a business licence under the Development Investment Act 1995-6 in order to operate in the Islands unless it is involved in banking or insurance activity.

Cook Islands Limited Partnership:

The creation of a limited partnership in the Cook Islands is governed by the International Partnerships Act 1984. Partnerships may have limited or unlimited liability. When registering the partnership the actual partnership agreement does not need to be filed. In a limited partnership, one of the partners must have unlimited liability.

An International Partnership must have one resident partner which can be either a resident licensed trustee company or an International Company incorporated under the International Companies Act 1981 and registered on the Islands. The rest of the partners must be non resident.

Cook Islands Trusts:

Cook Island trusts are known locally as International Trusts and are governed by the provisions of the International Trusts Act 1984 (the Act). All International Trusts must have non resident beneficiaries and a resident licensed trustee, although it is possible to appoint the local trustee to be only a custodian, with executive trusteeship exercised overseas. The Act requires that the local trustee must register a trust within 45 days of its creation and must certify that the trust is an International Trust under the Act.

The Act contains strict confidentiality provisions, subject only to some exceptions where criminal conduct is suspected. See Provision of Information for further details.

The Act, as amended, provides a thoroughly modern and flexible trust regime. Some of the key features of Cook Islands trusts are as follows:

The Act has abolished the perpetuity period rule;

Only the judgments of New Zealand courts can be enforced in the Cook Islands; The rule against accumulations has been abolished in the Cook Islands;

The common law rule against purpose trusts has been abolished in the Cook Islands;

The definition of what does and what does not constitute a charitable trust has been extended in the Cook Islands;

A disposition can be set aside only in very limited circumstances;

Majority decisions by trustees are permitted;

Re-domiciliation of trusts is permitted.

See Law of Offshore for a fuller description of the legal regime for Trusts in the Cook Islands. See Offshore Legal and Tax Regimes for further details of the tax position of of Cook Islands trusts.

A company offering trust services must obtain a licence.