Foundations in the Cook Islands and Nevis

The concept of foundations can be traced back to the Middle Ages, where they primarily served religious and charitable functions. Nowadays the role of foundations has expanded to encompass commercial activities and estate planning strategies.

Both the Cook Islands and Nevis have enacted modern foundation legislation designed to provide flexibility, confidentiality, and strong protection for assets. The Cook Islands Foundations Act 2012 and the Nevis Multiform Foundations Ordinance 2004 are two leading examples of how these jurisdictions have adapted foundation law to suit private wealth needs.

Southpac operates in both jurisdictions, acting as a Licensed Trustee Company in the Cook Islands and a Licensed Trust and Corporate Services Provider in Nevis, to assist clients in establishing and administering foundations suited to their personal and commercial goals.

Understanding Foundations

A foundation is a separate legal entity, often described as a blend between a company and a trust. Like a company, a foundation has its own legal personality and continues to exist independently of its founder. Like a trust, it is created to hold and manage assets in the best interest of its beneficiaries or to pursue specific purposes.

In distinction from a company, a foundation has neither shareholders nor owners and, once established and endowed, becomes a self-owning entity. The founder no longer legally owns the foundation or its assets, which creates a clear separation between individuals and the assets they wish to protect.

A foundation is managed by its foundation council (or management board), which is much like a board of directors. The foundation council operates in accordance with the terms of the foundation rules, which serve as the equivalent of a trust deed or operating agreement. Foundation council members owe a fiduciary duty to the foundation itself and not to the beneficiaries or the founder. Such distinction makes foundations especially attractive to founders who wish to retain a measure of control without exposing themselves to personal liability.

Cook Islands Foundations

The Cook Islands Foundations Act 2012 combines features of the jurisdiction’s renowned international trust and company legislation to deliver a structure focused on protection, flexibility, and control.

Key protective features include:

Non-recognition of foreign judgments or orders that conflict with Cook Islands law.
Exclusion of foreign laws, such as forced heirship, that might otherwise affect the validity of the foundation or transfers to it.
Full protection from future creditor claims for any assets placed into a foundation before a creditor cause of action has accrued.
Strict time limits on creditor claims. Claims must be brought within two years of the cause of action, and creditors must prove beyond reasonable doubt that a foundation was established to defraud them.
Limited remedies. If a successful claim is brought against a Cook Islands foundation, a creditor can recover only damages from foundation assets. Punitive damages are not available.

A Cook Islands foundation is well suited to:

Succession planning, especially when a founder wishes to remain involved as a council member.
Holding high-value or specialised assets, such as art, aircraft, or yachts, without the trustee diversification obligations that apply to trusts.
Preserving family businesses and preventing fragmentation of ownership after the founder’s death.
Serving as a special-purpose or holding vehicle for defined commercial activities.

These features make Cook Islands foundations a robust and versatile choice for long-term asset preservation and estate continuity.

Nevis Multiform Foundations

The Nevis Multiform Foundations Ordinance 2004 introduced an innovative structure allowing a foundation to operate in one of several “forms”, including those of trust, company, partnership, or ordinary foundation. The chosen form is specified in the foundation’s constitution and may be changed during its lifetime, providing exceptional flexibility.

Trust Foundations

A Nevis Trust Foundation operates much like a traditional trust while retaining the benefit of a foundation’s separate legal personality. The founder, known as the ‘Subscriber’ in Nevis, establishes the Trust Foundation, appoints a Management Board to act in the capacity of trustees, and may also appoint a Supervisory Board to perform the role of protector.

Trust Foundations enjoy the same strong protections found in the Nevis International Exempt Trust Ordinance, including:

Non-recognition of foreign judgments;
Forced heirship protection (transfers cannot be set aside by heirs under the laws of the subscriber’s jurisdiction);
Strict time limits for creditor claims and a high standard of proof (beyond reasonable doubt); and
Confidentiality of court proceedings and foundation information.

Company Foundations

A Nevis Company Foundation merges company and foundation features. A Company Foundation (Limited Liability Company) has members holding membership interests, similar to shareholders, but it also remains self-owned and benefits from foundation protections. Its governance is based on the Memorandum of Establishment and Bylaws, and it typically operates under the Nevis Limited Liability Company Ordinance 2017.

Key advantages of the Nevis Company Foundation include:

Its recognition as a separate legal entity capable of holding assets and incurring liabilities.
Non-recognition of foreign judgments; all claims must be brought in the Nevis High Court.
A USD $50,000 bond requirement for any creditor seeking to bring an action.
The ability for creditors to apply only for a charging order, which entitles them to any future distributions due to a member but does not allow interference with management or liquidation of the foundation. Charging orders expire after three years and cannot be renewed.

Conclusion

Both the Cook Islands and Nevis offer modern, secure, and flexible foundation regimes designed to meet the evolving needs of global families, entrepreneurs, and investors.

Cook Islands foundations provide exceptional protection and control within a strong statutory framework, while Nevis foundations deliver unique adaptability through the multiform concept in addition to their outstanding protective features.

For individuals seeking to safeguard wealth, preserve family assets, and maintain control in a stable offshore environment, either jurisdiction offers a proven and practical solution.

SOUTHPAC stands ready to assist clients in assessing which structure, Cook Islands or Nevis, best aligns with their objectives and long-term planning goals.