Cook Islands Foundation: Any thought of a corp service provider? And, any experience/thought about reputation?

[biz1]

Hi!

Do you have any thought about what's a good corporate services provider of Cook Islands foundations?

I recall asking some offshore incorporation service why they used to incorporate Cook Islands companies and they told me something like that Cook Islands had had a bad reputation and fallen out of fashion.

And, do you have any experiences of Cook Islands or thoughts about how well the jurisdiction works or its reputation?

Thanks

 

[Sols]

biz1 said:
Hi!

Do you have any thought about what's a good corporate services provider of Cook Islands foundations?
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Here's a list of the licensed trustees companies:
https://www.fsc.gov.ck/cookIslandsFscApp/content/business-contacts/trustee
Asiaciti, Southpac, and Portcullis are probably the most popular/biggest.

biz1 said:
I recall asking some offshore incorporation service why they used to incorporate Cook Islands companies and they told me something like that Cook Islands had had a bad reputation and fallen out of fashion.
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Reputation isn't an absolute (except for a few jurisdictions which are absolutely irreputable). Cook Islands are generally viewed better than for example Belize and Seychelles, and on the same general wavelength as Cayman Islands. It's very clearly a tax haven, but one that does not have a reputation for being as popular as Belize/Seychelles/et cetera with criminals.

biz1 said:
And, do you have any experiences of Cook Islands or thoughts about how well the jurisdiction works or its reputation?
Click to expand...

Depends on context and purpose.

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This is the probably the answer to your question.

 

[Golden Fleece]

From what I have read, the Cook Islands and Nevis have two of the best LLC statutes for asset protection.

https://www.offshorecompany.com/company/nevis-llc-vs-cook-islands-llc/
In addition, the Cook Islands courts have upheld protections for its trusts against foreign court judgments.

After twenty years the Cook Islands International Trusts Act remains a robustly utilitarian and effective estate protection tool for U.S. clients notwithstanding sometimes voracious criticism from U.S. commentators, courts and other offshore finance centers. The competitive advantage achieved by the Cook Islands has been recognized. The ITA has been copied and emulated in other offshore jurisdictions and the asset protection trust concept adopted in some U.S. states. While U.S. decisions now seem to focus on impossibility issues in contempt proceedings,153 Cook Islands cases demonstrate a focus on issues relating to ITAA section 13B.154 A body of Cook Islands precedent is building up which demonstrates both the seriousness of the purpose of Cook Islands courts and
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https://digitalcommons.pepperdine.e...e.com/&httpsredir=1&article=1049&context=jbel
I am surprised to hear that the Cook Islands has a reputation similar to the Cayman Islands. I tend to think of the Cayman Islands as the best jurisdiction in the Caribbean and possibly the best offshore jurisdiction in the Western Hemisphere, akin to Singapore or, until recently, Hong Kong in Asia. If that is true, then it has a huge leg up on Nevis and most other Caribbean tax havens, especially if you do business in Asia.

Last edited: Apr 4, 2021

 

[Sols]

Golden Fleece said:
I am surprised to hear that the Cook Islands has a reputation similar to the Cayman Islands. I tend to think of the Cayman Islands as the best jurisdiction in the Caribbean and possibly the best offshore jurisdiction in the Western Hemisphere, akin to Singapore or, until recently, Hong Kong in Asia. If that is true, then it has a huge leg up on Nevis and most other Caribbean tax havens, especially if you do business in Asia.
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Being a secretive low-tax jurisdiction with little to no local economic activity from isn't what makes a jurisdiction reputable. It might make it functional and attractive in some cases, though. Being compared to Cayman is not as good as being compared to Singapore.

Cayman is still in the same general area as Belize and Seychelles, but it's eked out a moderately better perception which it shares with a few others (Bermuda, Cook Islands, arguably Mauritius as well). They have most of the characteristics of the likes of Belize and Seychelles, but at least put efforts towards compliance with modern standards on taxation and transparency by for example setting up LLCs and moving over to territorial taxaion, and complying with FATCA/CRS, and implementing degrees of UBO disclosure and record keeping requirements.

Compare this to for example Singapore, Cyprus, Malta, and (arguably) Hong Kong (even UAE), which have significant local economies and attractive tax regimes (and far more auditing), but aren't as focused on secrecy.

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[JohnLocke]

I remember it was impossible to find a bank account for a Cook islands company, is that possible today or is there any EMI accepting CI companies?

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[Sols]

For non-wealthy clients, Cook Islands companies today tend bank with Capital Security Bank with their relatively modest 20,000 USD/EUR/GBP requirement. For wealthier clients (six-seven figures and up), there are always more options available (Singapore, Switzerland, Hong Kong, New Zealand, Australia) but some still work with Capital Security Bank. Multi-regional corporate service providers might be able to place clients elsewhere. Depends on the business.

If you're someone who prefers the DIY approach, you can probably place a CK company with EMI. Never had a reason to try or come across that.

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This is the probably the answer to your question.

 

[biz1]

Thank you all for sharing your thoughts. My general thoughts regarding choice of jurisdiction:

• There are surprisingly big privacy problems in business today, e.g. publicly published directors and even shareholders, this is a reason for Cook. Also
• Some busienss hubs have BEPS regulations that may require local employees or-else. Such regulations are a tiring bureaucratic nusiance.

@Sols , @Golden Fleece , @Admin , please confirm that I understood this right:

About exchange of information about entities such as on Cook, or other typical business hub that is Marshall Islands, Mauritius, Caymans, Bermuda, Malta, Gibraltar, Cyprus, Isle of Man:

• The automatic information exchange deals out there such as AOEI and CRS do not apply to the entity itself/as such, meaning if you incorporate, governments will not automatically report the information they have automatically (e.g. director/ownership information, financial accounts).
  
  Of course if this information is published in public directories, it could leak to anyone that way. This would be an incentive to choose a jurisdiction without public directors and shareholders.
  
  
• TIEAs (Tax Information Exchange Agreement) and DTTs (Double Tax Treaties) permit one government to enquire for information with another government, but these are not automatic programs. (Also there is no absolute requirement from the other government to actually respond.)
  
  
• (For completeness, UBO is not published publicly in any of the jurisdictions I listed above. Actually in many cases a government will not have UBO information for an entity. Incorporation service providers do not necessarily document UBO, or if one files the forms )

Therefore, automatic reporting starts happening only when an entity gets for itself financial accounts such as bank, EMI, stock trading accounts. (Plus physical bank lock boxes are or may be CRS-reportable also is it not so.) Financial accounts will ask the holder to declare UBO information, and may exchange it.

Did I get it right?

Also to round up this topic, do you see any risks that the automatic exchange of information could become even worse than it is today, in the foreseeable future? If so what more information would they share, your favourite foods eh.

Sols said:
Reputation isn't an absolute (except for a few jurisdictions which are absolutely irreputable). Cook Islands are generally viewed better than for example Belize and Seychelles, and on the same general wavelength as Cayman Islands. It's very clearly a tax haven, but one that does not have a reputation for being as popular as Belize/Seychelles/et cetera with criminals.
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@Sols which in your view are the "absolutely irreputable" business hub jurisdictions. With Seychelles I can get the impression that they have a lack of professionalism as in a bit of anything could potentially actually be going on over there.

Sols said:
Depends on context and purpose.
Click to expand...

@Sols generally what do you think Cook Islands would be great for and not great for

 

[Sols]

biz1 said:
@Sols , @Golden Fleece , @Admin , please confirm that I understood this right:

About exchange of information about entities such as on Cook, or other typical business hub that is Marshall Islands, Mauritius, Caymans, Bermuda, Malta, Gibraltar, Cyprus, Isle of Man:

• The automatic information exchange deals out there such as AOEI and CRS do not apply to the entity itself/as such, meaning if you incorporate, governments will not automatically report the information they have automatically (e.g. director/ownership information, financial accounts).
  
  Of course if this information is published in public directories, it could leak to anyone that way. This would be an incentive to choose a jurisdiction without public directors and shareholders.
  
  
• TIEAs (Tax Information Exchange Agreement) and DTTs (Double Tax Treaties) permit one government to enquire for information with another government, but these are not automatic programs. (Also there is no absolute requirement from the other government to actually respond.)
  
  
• (For completeness, UBO is not published publicly in any of the jurisdictions I listed above. Actually in many cases a government will not have UBO information for an entity. Incorporation service providers do not necessarily document UBO, or if one files the forms )

Therefore, automatic reporting starts happening only when an entity gets for itself financial accounts such as bank, EMI, stock trading accounts. (Plus physical bank lock boxes are or may be CRS-reportable also is it not so.) Financial accounts will ask the holder to declare UBO information, and may exchange it.

Did I get it right?
Click to expand...

Correct. Financial accounts are reported automatically. Information about companies only upon request.

biz1 said:
Also to round up this topic, do you see any risks that the automatic exchange of information could become even worse than it is today, in the foreseeable future? If so what more information would they share, your favourite foods eh.
Click to expand...

Assume your home government knows everything about your offshore company. Once compliance is ensured across EMIs and other non-bank bank-like financial service providers, crypto exchanges and payment service providers are probably next in line.

biz1 said:
@Sols which in your view are the "absolutely irreputable" business hub jurisdictions. With Seychelles I can get the impression that they have a lack of professionalism as in a bit of anything could potentially actually be going on over there.
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For example Liberia, Marshall Islands, Vanuatu, Belize, Seychelles, Grenada, SVG. Each one can be useful for specific cases but in general I'd almost always go for something else.

biz1 said:
@Sols generally what do you think Cook Islands would be great for and not great for
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I'd start with the problem and then look for a solution (jurisdiction/company/setup), not the other way around.

I mostly see Cook Islands used for asset protection (including transfer of wealth) and occasionally for consulting-type businesses.

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This is the probably the answer to your question.

 

[JohnLocke]

Sols said:
Capital Security Bank
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They were advertising here for some time ago. Will note this for the very near future 🙂

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[biz1]

Sols said:
Depends on context and purpose.
Click to expand...

@Sols the context and purpose are, a structure/an entity that can hold shares and act as a director, without that the entity/structure's own directors and shareholders is published publicly.

Bonus: That the structure/entity is its own UBO, if anyone would care/if it would make any difference. (A foundation is.)

Optional bonus: can pay invoices, can own immaterial rights. However the Cook entity could own a company in any jurisdiction that allows a company to have one corporate director as only director (as do Cyprus etc.).

Last edited: Apr 5, 2021

 

[Sols]

biz1 said:
@Sols the context and purpose are, a structure/an entity that can hold shares and act as a director, without that the entity/structure's own directors and shareholders is published publicly.

Bonus: That the structure/entity is its own UBO, if anyone would care/if it would make any difference. (A foundation is its own UBO.)

Optional bonus: can pay invoices, can own immaterial rights. However the Cook entity could own a company in any jurisdiction that allows a company to have one corporate director as only director (as do Cyprus etc.).
Click to expand...

The first bit is easy. It's the bonuses that take us into rather sophisticated territory. Have a discussion with Asiaciti Trust and Southpac about what you want to achieve. Cook Islands might be a good fit.

But for the sake of good due diligence, I'd also speak with the likes of Appleby, Conyers, Vistra, and Ogier that know Cayman Islands, BVI, Isle of Man, and Channel Islands quite well. Compare and see what fits you best.

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[biz1]

@Sols just curious,

(1) Can you imagine a real-world situation where the question "is it Sols Foundation (CK) or Mr. Sols physical person (who is also a director of Sols Foundation) who is the actual UBO of a said asset" makes or can make actual real world difference? Please tell

(2) Without using nominee shareholders and directors, do you see any other way available for oneself to not have one's name and address published, other than incorporating in a jurisdiction that does not publish them?

 

[Sols]

biz1 said:
(1) Can you imagine a real-world situation where the question "is it Sols Foundation (CK) or Mr. Sols physical person (who is also a director of Sols Foundation) who is the actual UBO of a said asset" makes or can make actual real world difference? Please tell
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Yes. Foundations are separate legal persons. If you own something yourself, you can be sued yourself. If it's owned by a foundation, the foundation will have to be sued.

biz1 said:
(2) Without using nominee shareholders and directors, do you see any other way available for oneself to not have one's name and address published, other than incorporating in a jurisdiction that does not publish them?
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No.

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This is the probably the answer to your question.

 

[Jerry1911]

Sols said:
I mostly see Cook Islands used [...] for consulting-type businesses.
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I wonder where their clients are based considering they can accept invoices issued by companies from Cook Islands?

 

[Sols]

Jerry1911 said:
I wonder where their clients are based considering they can accept invoices issued by companies from Cook Islands?
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This is difficult to answer.

Most companies accept invoices from offshore companies. The risk to companies is if the tax authority suspects the invoices of being fraudulent (for example used to artificially lower the company's tax burden). To prepare for that, some companies request documents to be able to prove that the company isn't controlled by them.

Sometimes there is a minimum transaction value before documents are required or before the company will enter into an agreement with an offshore company. I have seen some companies not ask for under for example 10,000 EUR and I have seen some that have a policy against offshore companies unless there is board approval (which usually implies it's a high-value consultant).

The same also goes for government works.

If your company is incorporated in a blacklisted jurisdiction, the above controls are even tighter. However, Cook Islands aren't for example on the EU blacklist anymore since 2019.

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