Southpac Announces Passage of Cook Islands International LLC Act Containing Asset Protection Features

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The Cook Islands Parliament recently enacted a new, comprehensive limited liability company act. Southpac is pleased to have assisted in the drafting of this important legislation. With several unique asset protection measures included in the legislation, the Cook Islands is now the most advantageous jurisdiction in which to establish an LLC. The new Cook Islands International LLC Act will be discussed in greater detail at the 2008 Southpac Offshore Planning Institute at the Wynn Las Vegas on September 18 and 19, 2008.

Southpac is pleased to announce that the Cook Islands Parliament has enacted a new, comprehensive limited liability company act. Brian Mason, the General Manager of the Southpac Group of companies, was instrumental in coordinating the drafting of this legislation. Fielding contributions from a number of leading business and asset protection planning attorneys in the United States, the Cook Islands International Limited Liability Company Act (2008) offers unique advantages not found in any other jurisdiction. Combining a Cook Islands trust with a Cook Islands LLC now offers the most comprehensive form of asset protection available.

The Cook Islands International LLC Act specifies that the charging order is the sole and exclusive remedy of a creditor against a member's LLC interest. However, unlike LLC laws in the United States, the Cook Islands law clarifies that the charging order does not constitute a lien on a member's interest, and it does not make the creditor an assignee of a membership interest. A member whose interest is subject to a charging order continues to exercise the rights of a member. These rules apply whether the LLC has one member or several.

The Cook Islands International LLC Act further limits the effect of a charging order by spelling out that a creditor has no right to participate in or interfere with the management of the LLC. The creditor cannot seize or liquidate LLC assets, restrict the business of the LLC, or force a dissolution of the LLC.

A charging order cannot be obtained to recover punitive damages, treble damages, or any other form of monetary award that is exemplary in nature. Furthermore, foreign judgments concerning the use of a member's interest to satisfy a creditor's claim are not recognized in the Cook Islands. The LLC is not subject to discovery orders or injunctions issued in relation to a member or a membership interest.

The Cook Islands have taken the novel step of allowing members to decide whether to opt out of the asset protection features of the International LLC Act. This may be useful for clients engaged in international business transactions.

The provisions of Cook Islands confidentiality law apply to LLCs established under the new International LLC Act. Members should enjoy complete confidentiality with respect to their ownership of an LLC interest.

While the new LLC Act provides several formidable asset protection barriers, the LLC is not intended to serve as a substitute for what is widely regarded as the most powerful tool for asset protection available today: the Cook Islands asset protection trust. Rather, it is hoped that clients engaged in asset protection planning will utilize a Cook Islands LLC in conjunction with a Cook Islands trust to secure the greatest degree of protection and investment flexibility.

The Cook Islands is the leading jurisdiction for offshore asset protection planning. Southpac helped author the first ever asset protection trust law, the Cook Islands International Trusts Act (1982), which has served as the template for similar legislation in over a dozen other countries and several U.S. states. The Cook Islands trust offers important asset protection benefits such as a shortened statute of limitations on fraudulent transfer claims and a heightened burden of proof that creditors must meet to bring claims against a trust in the Cook Islands.

The Cook Islands International LLC Act (2008) will be covered in detail at the Southpac Offshore Planning Institute, to be held Thursday and Friday, September 18 and 19, 2008, at the exclusive Wynn Las Vegas Hotel. The event will feature several of the nation's leading asset protection attorneys and members of the Southpac Board of Advisors covering such topics as domestic and foreign asset protection trusts, offshore banking, and innovative techniques designed to preserve wealth, such as offshore private placement life insurance, annuities, and equity financing.

Southpac has offices in the Cook Islands, Nevis, and New Zealand. Southpac affiliates include Capital Security Bank, the only full service private bank operating exclusively from the Cook Islands. Southpac Life Insurance Limited and International General Insurance (Cook Islands) Limited are also affiliates of the Southpac Group, offering tax-advantaged investment opportunities for high net worth families. Advisory services are provided separately through Southpac Group Switzerland, with offices in Zurich, Tortola, and Singapore.

This year's Southpac Institute is sponsored in part by Rochdale Offshore Investment Management. The Southpac Institute is hosted by Southpac Group Switzerland and MDI Insurance Services, LLC. Attorneys, accountants, and wealth management planners are welcome to register for the event by contacting Southpac Group Switzerland at +41.44.586.11.32 or by visiting US participants may call MDI at (704) 837-0029 for more information or to register.


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