Cook Islands offshores mutual funds
The Cook Islands is not a well known jurisdiction for mutual funds, but the fact is that it has a thriving mutual funds business, promoted publicly in Australasia and the South East Asia region. A number of highly recognizable financial institutions already use the Cook Islands for this purpose. So at GCSL we believe its time that the rest of the world became aware of the unique qualities of doing mutual funds business out of this jurisdiction in the South Pacific.
An International company is the most commonly used vehicle for the establishment of a mutual fund. The advantages of using an international company is that it allows for a flexible capital structure; there is very strong confidentiality provisions (there is no requirement for a public record of shareholders), and for those who already administer mutual funds, there is minimal on-going administrative requirements which translates into minimal costs.
Make no mistake, mutual funds are subject to the due diligence requirements of the Cook Islands, but what is remarkable is the relative ease with which mutual funds can be established and administered in the Cook Islands, compared with other more high profile jurisdictions. There are some interesting administrative provisions in the Cook Islands legislation, which makes this jurisdiction attractive for this type of business. For example a registered company auditor is required to be appointed within 90 days of incorporation, but there is no requirement to file audited accounts with the Registrar. There are many other advantages provided for under the International Companies Act of the Cook Islands.
Flexibility in the corporate structure and ease of administration extends to the mechanical aspects of share redemptions. For example, shares may be redeemed at the request of the shareholder at prices based upon the net asset value or any other calculation if prescribed in the Company's Articles of Association. It is possible to create a mutual fund which is closed-ended at the outset, but which will become open-ended at a future date by the happening of a specific event. There are no restrictions on how a mutual fund can be structured â so long as Cook Islands law is complied with.
Where there is a public offering of shares then a prospectus must be approved. However, where a prospectus is registered in an approved jurisdiction for the purpose of raising money from the public in that jurisdiction, it is unnecessary for the prospectus to be approved in the Cook Islands so long as a copy of the prospectus is filed with the Registrar within 28 days of registration or filing in the approved jurisdiction.
Approved stock exchanges include; Australia, New Zealand, Hong Kong, Indonesia, Singapore, Taiwan, Malaysia, Thailand and the United States. The Registrar has the power to extend the list of approved jurisdictions.
Where there is no offer of shares to the public, then there are no statutory rules or regulations governing the content of offering documents. However at GCSL we will insist that measures are taken to ensure that the offering documents make fair and adequate disclosure of all facts, which are likely to influence investors.
Of course it goes without saying that an international company is exempt from any form of taxation in the Cook Islands including stamp duty, capital gain tax, capital duty, and withholding tax.
The fact is that the Cook Islands are a jurisdiction waiting to be discovered for its mutual funds business with services to match any other more known mutual funds jurisdictions. At ASG we have the infrastructure and the know how to set up a mutual fund for your clients at very competitive costs.
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