July 15, 2018 Cornelia Lawrie

A SHIELD FOR YOUR DEFENSES OR AN UMBRELLA IN THE RAIN STORM OF LIFE

A-shield-for-your-defenses-or-an-umbrella-in-the-rain-storm-of-life

BY CORNELIA LAWRIE

Assistant Legal Counsel

The Cook Islands are world renowned for their asset protection laws and the limited liability company (LLC) is no exception to the rule.  It allows the diversity of a limited partnership with elements of a corporate structure and the fact that liability is limited means that the members  are separate from the identity of the LLC.  What is meant by this is that an LLC is afforded its own identity, much like individuals have their own legal identity.  Something to note is that while many jurisdictions around the world offer LLCs, they are not all created equal – make sure you do your homework!

If you are looking for a politically and economically stable jurisdiction then the Cook Islands are a great option for an LLC.  Privacy laws mean the Cook Islands do not hold a publicly accessible register of managers and members. Even more importantly, the two year statute of limitations that applies to assets that are held by a Cook Islands trust covers assets that are placed into the control of a Cook Islands LLC. US courts (thanks to the statute of limitations) struggle to touch Cook Islands LLCs when they have been properly structured (unlike US based LLCs).

So, you ask, what sets the LLC apart from an International Business Company (IBC)? As mentioned earlier, the LLC is a blend of a typical company structure like an IBC may have, combined with the functions of a limited partnership. This flexibility allows a more diverse range of uses and is widely accepted in any part of the world. LLCs can be used for any lawful activity or legitimate business venture. Examples of activities include: holding cryptocurrency accounts, investments, financing arrangements, real estate holdings, manufacturing and as an operational vehicle for international trusts. Another great point to note is that LLCs have a perpetual lifespan: imagine the asset protection and returns for future generations that could come from that!

LLCs can be established in the Cook Islands under the Limited Liability Companies Act 2008, and can be formed quickly. Under the legislation an LLC requires a minimum of one manager and one member. The legislation provides the basics for how an LLC can function and the duties of each officer, while not necessary it is preferable that an LLC adopt an operating agreement which will set out the specifics of each officer’s duties and obligations as well as the fundamentals for how the LLC will operate and its activities.

So what does it take to be a manager? A Cook Islands LLC can function with a single or multiple managers, as previously mentioned. Managers can be individuals or companies and can be from any jurisdiction meaning that the structure can be flexible to meet the LLCs purpose. Southpac as registered agent will conduct due diligence checks on each manager and provided they meet Southpac’s standard due diligence requirements then they can be appointed as manager.

The owner of the LLC membership interests, otherwise known as the member (equivalent to the shareholder in a typical limited company structure), can, like the manager, be any person, company, or trustee from anywhere in the world, and there can be multiple members. The member/s is the officer that elects to establish the LLC and appoints its manager/s.

The one sole requirement that is non-negotiable and very specific to Cook Islands LLCs, is the legislative requirement to have a Cook Islands based Registered Agent.

A Cook Islands LLC can act as a shield against any potential litigation and, for the ultimate asset protection structure, you might like to consider having an LLC under the umbrella of an international trust. This enables the direct management of assets with the protection of the trust as the trust would hold the membership interest in the LLC. Twice the protection under one umbrella!

If you have any questions or would like to set up a Cook Islands LLC please contact us at enquiries@southpacgroup.com.

We will be happy to help you tailor the best umbrella to fit your needs.

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