Asiaciti Trust Paci?c Limited was incorporated and registered in 1986 as a trustee company under the Cook Islands Trustee Companies Act 1981-82. The company is a member of the independently owned Asiaciti Trust Group which was founded in 1978 by an Australian chartered accountant, Graeme Briggs. Asiaciti Trust Group has offices in Singapore, Hong Kong, Cook Islands, Samoa, New Zealand, Switzerland and Uruguay. o9 Graeme W. Briggs who is the Executive Chairman of Asiaciti Trust Paci?c Limited has been directly involved in the international mist and offshore corporate services industry since 1971. Over the past 35 years he has developed considerable expertise in international tax and corporate planning with particular specialisation in offshore trusts. captive insurance. offshore banking and international investment management structru?es. Adrian L. Taylor is an Australian Lawyer. and is General Manager of Asiaciti Trust Pacific Limited. resident in the Cook Islands. He is admitted to practice law in the Cook Islands. New Zealand Australia. Adrian has over 20 years experience in providing advice to private clients on trust and other structures designed to protect family wealth. The Cook Islands comprises a group of 15 islands located between Tahiti in the east and Samoa and Tonga in the west. The main island of Rarotonga is 3.000 kilometres north-east of Auckland. New Zealand and the township of Avarua on that island is the administrative and commercial centre of the Cook Islands. Total population of the island group is approximately 19,000. The indigenous population is Polynesian but English is spoken by most of the community. Local time is 10 hours behind Greenwich Mean Time and consequently 5 hours behind New York. 18 hours behind Hong Kong and 20 hours behind Sydney. The Cook Islands levies various taxes on domestic business activities. Total exemption ?om these taxes is granted to ?International Companies? incorporated lmder the International Companies Act 1981-1982 and Trusts registered under the International Trusts Act 1984. The climate is tropical with good resort hotels. beaches. sporting and recreational activities. duty-free and other tourist facilities. Matters of tourist interest include traditional Polynesian feasting. music-making and dancing. and stores display many fine locally produced artefacts and clothing. GOVERNMENT Great Britain proclaimed a Protectorate over the Cook Islands in 1888 and in 1901 the islands were ceded to New Zealand. The Cook Islands became fully self- governing in 1965 under the Cook Islands Constitution Act 1964. Since obtaining self-government the Cook Islanders have retained New Zealand citizenship. The Government has reaf?rmed continuing support and encouragement for the development of Rarotonga as a ?nancial centre. There are two main political parties. the Democratic Party and the Cook Islands Party which between them hold all 25 seats in Parliament. Both parties support the Cook Islands status as an offshore ?nancial centre. Executive authority is vested in Her Majesty the Queen. The Queen?s Representative is appointed upon the advise of the Cook Islands Govermnent. Executive Government lies with a cabinet comprising the Prime Minister and nine other Ministers appointed by the Prime Minister. The Cook Islands has growing international stature and is a member of the South Pacific Forum. the Asian Development Bank and the Economic for Asia and the Paci?c. LEGAL STRUCTURE The High Corut of the Cook Islands was established under the Cook Islands Constitution Act 1964 and is the superior Corut of record. The legal system is based upon the principles of the English common law and equity. Appeals ?om the High Court lie to the Cook Islands Court of Appeal and to the Privy Cormcil in England. MONETARY SYSTEMS AND EXCHANGE CONTROLS New Zealand and Cook Islands currency are both used in the Islands. There are no local restrictions on the movement of ?mds to or from the Cook Islands in other crurencies and fluids may be held and business transacted in the Cook Islands in any currency. COMMUNICATIONS Rarotonga has a continuous international telephone. telex email and facsimile service via satellite. Direct dialling to Rarotonga is available ?om most corurtiies. There are also good international postal and courier services. Air New Zealand operates various Boeing 747 and 767 ?ights through Rarotonga to Auckland. Tahiti. Hawaii. Los Angeles and Fiji. These services provide direct access to Australia. South East Asia. the United Kingdom. USA as well as Europe. FINANCIAL SERVICES Banking services in the Cook Islands are provided by Westpac Banking Corporation and the Australia and New Zealand Banking Group Limited. both of which haves world wide networks of branches and agents. Banking services with other banks in Switzerland. Singapore. Hong Kong and elsewhere are available through the Asiaciti Trust Group. Trustee services are provided by a number of trust companies operating in Rarotonga. A full range of offshore ?duciary services including trust and corporate administration. investment management. custodian and secretarial services is available from Asiaciti Trust Paci?c Limited and its affiliates within the Asiaciti Trust Group. Accormtancy and audit services are provided by local and international ?rms of accountants. Legal services are provided by local ?rms of solicitors. COUNTRY PROFILE The Cook Islands is a progressive offshore jurisdiction with sophisticated and innovative legislation designed for asset protection trusts, international companies, mutual funds, offshore banks and insurance companies, and international partnerships. On the following pages we outline the Cook Islands offshore legislation and the services provided by Asiaciti Trust. TRUST COMPANIES A Company is not permitted to carry on business in the Cook Islands as a trustee company unless it is registered pursuant to the provisions of the Cook Islands Trustee Companies Act 1981-1982. Carrying on business as a trustee is widely defined and includes acting as trustee. executor or administrator. The control of the registration of trustee companies lies with the Cook Islands Financial Supervisory Commission, which looks at the suitability of the applicant and the experience of this associated with the applicant. Minimum capitalisation requirements also apply. Asiaciti Trust Paci?c Limited is registered rmder the Cook Islands Trustee Companies Act 1981-1982. INTERNATIONAL COMPANIES A Company can be incorporated under the International Companies Act 1981-1982 as an international company if its shareholders are non- resident of the Cook Islands. however. a trustee company registered under the Trustee Companies Act 1981- 1982 may hold shares in an international company and may be the sole shareholder. Asiaciti Trust Paci?c Limited can incorporate an intemational company within 24 hours of receipt of instructions. 4 There are no minimum capital requirements and shares may be of no par value. Shares may be designated in most major crurencies and bearer shares may be issued (but must be with a Cook Islands custodian. which can be a Trustee Company). unless this is prohibited by the Articles of Association. Only one director of an international company need be appointed and there is no obligation to appoint a resident director. It is obligatory to have a resident secretary who must be an of?cer of a registered trustee company. Additional secretaries may be appointed who need not be residents. An international company may be incorporated for any lawful purpose. other than that of a trustee company. but shall not carry on the business of banking or insurance. unless it is licensed under the relevant Act. Principals or promoters of international companies may remain anonymous as there is no obligation to disclose any details of bene?cial ownership of shares. Such anonymity is further guaranteed by virtue of the provisions of Section 8(5) of the Act which impose penal sanctions on any person who discloses information derived from an inspection of the records of an international company. The documents lodged with the Registrar of International Companies are only available for inspection by directors. members and debenture holders. Corut proceedings relating to the rights or obligations of of?cers or members or debenture holders must be heard in camera. unless the Corut orders otherwise. All companies must lodge annual returns accompanied by audited accormts unless the members of the Company (being a private company) resolve at each annual general meeting that auditors should not be appointed. The legislation expressly provides that international companies and foreign companies registered rurder the International Companies Act 1981-1982 and their shareholders will not be subject to any form of taxation including stamp duty. The legislation also provides such entities with a guarantee that the Crown will not compulsorily acquire or expropriate their property situated in the Cook Islands except under specified de?ned by law. A foreign company incorporated outside the Cook Islands may register under the International Companies Act 1981-1982 if it has a place of business or is carrying on business from within the Cook Islands. Once registered imder the Act it is subject to the same provisions as an international company. The Act permits the incorporation of various types of companies other than companies limited by shares. These include no liability companies. companies limited by guarantee. unlimited companies and mutual companies. Special features of the Cook Islands International Companies Act 1981-1982 include: TRANSFER OF CORPORATE DOMICILE One of the essential criteria for international tax plarming is ?exibility. There should be an ability to modify an offshore structure as a consequence of a change in circumstances and the Cook Islands legislation permits such ?exibility through provisions which enable a company to transfer its domicile. The International Companies Act enables- companies incorporated in other jurisdictions to transfer their registration to the Cook Islands as international companies. and: international companies to transfer their registration to other jurisdictions. ISLANDS A PROGRESSIVE OFFSHORE JURISDICTION STOCK EXCHANGE LISTING Amendments to the International Companies Act in 1991 provide for International Companies to become listed 011 a number of major Stock Exchanges. In addition foreign companies already listed on designated stock exchanges can now make application to transfer their domicile to the Cook Islands. SHARE CAPITAL The Act provides considerable ?exibility in regard to reduction of share capital. Specifically. the Act allows: a Company to purchase and cancel its own shares: redemption of shares without maintenance of capital and without the need for a Court order: a Company to ?nance the piu'chase of its own shares. INSURANCE COMPANIES The Cook Islands insurance legislation readily facilitates the establishment and operation of captive insurance and re-insurance companies. The Offshore Insurance Acts of 1981-1982 and 1984 control the licensing of companies that wish to conduct offshore insurance business from the Cook Islands. Offshore insurance business is defined as any insurance business where each of the insru'ed. the policy bene?ciary and the owner of the policy are not domiciled nor ordinarily resident in the Cook Islands and are not domestic companies or a trustee company. Only an international company or a foreign company registered under the International Companies Act 1981- 1982 may be licensed to carry on offshore insurance business. A licensee is not permitted to transact any insmance business other than offshore insm?ance business and use the services of a registered trustee company to conduct such business. An offshore insurance company is required by Regulation to have a surplus of tangible assets over liabilities of imless this requirement is exempted by the Minister of Finance under Section 23A. A licence is not required for offshore insurance business transacted between companies which are related or for the re-insurance of risks ceded from a licensed offshore insurance company. The companies are deemed to be related if they have a parent subsidiary or fellow subsidiary relationship. A company licensed rurder the Off-shore Insurance Act is exempt from any form of taxation and duty. it must however file audited amrual accounts with the Cook Islands Financial Supervisory Commission which administers the Act. In addition to the general secrecy provisions of the International Companies Act 1981-1982. the Offshore Insurance Act contains strict secrecy provisions which impose penal sanctions on any Government official. officer or employee of a licensee or of its auditor who discloses any information concerning the offshore insurance business of the licensee. Asiaciti Trust Paci?c Limited is fully experienced in the formation and management of captive insurance and re-insurance companies and further details are available through any of?ce of the Asiaciti Trust Group. At the time of writing (February 2005). a comprehensive review of the Offshore Insurance Act has been proposed by the Financial Supervisory Commission. BANKS AND NIERCHANT BANKS Banking business in the Cook Islands may only be carried on iuider a licence issued by the Financial Supervisory Commission under the Banking Act 2003. The Banking Act requires that all licensed banks have a physical presence in the Cook Islands. The Financial Supervisory Commission considers that ?physical presence? means that the mind and management of the bank must be based in the Cook Islands. that the bank have an of?ce in the Cook Islands which is open to the public during normal business hours. that all records of the bank must be kept within the Cook Islands and that all transactions of the bank must be approved by the management of the bank in the Cook Islands. The Asiaciti Trust Group has extensive experience in the formation and management of offshore banks. Further details are available from Asiaciti Trust Paci?c Limited or any of?ce of the Asiaciti Trust Group. INTERNATIONAL TRUSTS A trust. which is registered rmder the Cook Islands International Trusts Act 1984 (as amended) is entitled to the bene?ts and protection provided by that Act. The Act provides a registration system whereby a registered trust is sheltered from both the general cormnon law and Cook Islands statue law insofar as those laws are inconsistent with the Act. Application for registration is made by a licensed Trustee Company. The application must certify that no resident of the Cook Islands is a bene?ciary. advise the date of the trust deed. the name of the trustee and the name of the trust. There is no requirement to ?le the trust deed with the Registrar. Any information pertaining to an international trust. including the deed of trust and the identity of parties connected with the trust is con?dential and subject to the secrecy provisions of the Act. The Act creates a ?exible tax effective environment in which the familiar English trust concept can be used for both tax planning and asset protections purposes. The trustee(s) beneficiaries and settlor of an international trust are exempt from any form of taxation and duty in the Cook Islands. The legislation removes some of the difficult aspects of the common law relating to trusts. The modern rule against perpetuities has been abolished although if desired a speci?c perpetuity period can still be selected by the settlor at the time the trust is established. Other common law rules such as the rule against accumulations and double possibilities do not apply. The Act, as a consequence of amendments in 1989 and 1991. contains innovative statutory provisions for the protection of assets held under international trusts. The legislation overcomes speci?c common law problems to provide protection for settlors and bene?ciaries from unwarranted claims against trust assets. More recent amendments in 1996 and 1999 have expanded the de?nition and role of the protector. expanded the scope of the Purpose Trust and adopted with slight modi?cation Section 50 of the New Zealand Trustee Act 1956 in respect of Custodian Trustees. Asset protection trusts are explained further in the following pages. PARTNERSHIPS The International Partnerships Act 1984 provides for the registration of partnerships in the Cook Islands including the exemption of the partners ?om any taxation and duties in the Cook Islands. An international partnership must have at least one partner who is either a trustee company. an international company or a registered foreign company. All partners must be non-residents of the Cook Islands. The Act also permits the registration of limited partnerships comprising of at least one general partner and on limited partner. One of the general partners must be either a trustee company, an international company or a registered foreign company. Registration of an international or limited partnership is a simple procedure and the partnership agreement does not need to be ?led. The International Partnerships Act contains extensive secrecy and con?dentiality provisions. including penal sanctions for their breach. THE COOK ISLANDS LEADS THE OFFSHORE WORLD The concept of using trusts to protect assets has been established for several centuries. Asset protection trusts. as they have come to be known. were created to protect bene?ciaries from a wide range of potentially adverse everrtualities. The common objective has been essentially to protect the assets of the settlor against the consequences of ?nancial disasters which may arise from the imposition of excessive death duties. the extravagance of family members. of business ventru?es. or ?'orn the actions of third parties. In recent years greater emphasis has been placed upon the need to preserve wealth from the ravages of litigation. political risk and government expropriation. marital or family breakdown. and contingent creditors. This trend has been fuelled by the economic of the late 1980?s. major political changes in Europe and elsewhere. and the growing influence in international law of the US generated penchant for litigation. In various jurisdictions we have seen over the past 10 years. an escalation of personal risk as a consequence of penal awards by juries or over zealous courts. increased exposure of non-executive directors as corporate laws become overly protective of creditors and shareholders. and in the case of the latter. the loss of traditional protection as the corporate shield has been removed by legislation. As a consequence liability and professional insurance protection has inadequate and. where available. expensive. Increasingly. wealth protection planning has become an essential consideration in the development of ?nancial strategies of high net worth individuals. company directors and professional practitioners. In turn asset protection trusts. particularly those based offshore have as a primary component in such planning. The starting point of any asset protection plan is a consideration of the laws of the client?s domestic jurisdiction. Laws which may be relevant would be those governing issues such as exchange controls. estate duties or inheritance taxes. capital gains taxes. bankruptcy and in particular ?audulent conveyances. and matrimonial settlements. The relevance or otherwise of such laws will in many instances help determine the nature of the assets which the client will settle into the asset protection trust. and whether or not such trust should be located in an offshore jurisdiction. It must be recognised that basing an asset protection trust offshore will not absolve the client from the need to comply with his domestic laws. As the principle objective of the client will be to protect assets against the prospect of his or a bene?ciary?s future bankruptcy. the domestic laws against fraudulent transfers of property are of paramount importance. In most jurisdictions there are laws which operate to set aside transfers of property which are made with the intent to defraud creditors. Such intent need not be express and in many instances intent to defraud is deemed to occur where transfers of property are made within a speci?ed period of time. Often criminal prosecution may result from such actions. It is essential that asset transfers are made well ahead of any potential creditor action. properly documented. and placed in a legal enviromnent which offers the utmost protection from potential attack. There are a munber of reasons why most advisors recormnend that asset protection trusts be established offshore. Obviously assets held in a domestic trust are more susceptible to attach. However. one of the principal attractions for placing assets in an offshore trust is the legislation which has been introduced in some o??shore jurisdictions speci?cally to facilitate asset protection. The Cook Islands was the ?rst offshore jurisdiction to enact such legislation under the International Trusts Amendment Act 1989. Fruther amendments were enacted in 1991. 1996 and 1999. As a result the Cook Islands currently has the most modern international trust legislation with particular emphasis on the protection of assets. the protection of bene?ciaries and ?exibility of ?control? by the settlor. The Cook Islands international Trust law is derived from English common law but the legislation has removed some of the problem areas of the common law pertaining to trusts. Features of the Cook Islands legislation include: 1. All international trust will not be void or voidable as a consequence of the settlor?s bankruptcy. notwithstanding any law to the contrary in the settlor?s domestic jurisdiction. 2. If a creditor establishes that an international trust was settled with the principal intent of de?auding a creditor and such settlement rendered the settlor insolvent or without property by which the creditor?s claim could be satis?ed. the settlement shall not be void or voidable but the trust shall be liable to satisfy that creditor?s claim from trust property which was the subject of such settlement. 3. Generally foreign judgements cannot be entered against an international trust in the Cook Islands. 4. An international trust shall not be ?audulent against a creditor or the settlor if: the transfer of property takes place more than two years after the date upon which the creditor?s cause of action arose: or such a transfer takes place within two years from the date of the cause of action accruing to that creditor and the creditor fails to bring that action within one year from the date of such transfer. 4. The settlor may retain certain powers and benefits without invalidating the trust. 5. The interest of a beneficiary in an international trust may not be alienated by a creditor. 6. The avoidance of forced heirship rights shall not render an international trust void or voidable. 7. A trustee may delegate its fimctions. discretion?s and powers (other than dispositive powers) beyond the general common law rule on delegation. 8. Co-trustees may make valid decisions as a majority rather than unanimously. Title to trust property may be held by a single co.-trustee. 9. The settlor. bene?ciaries and the international trust are not subject to any form of taxation in the Cook Islands. It is important to note that whilst the legislation allows such ?exibility. the provisions outlined in 5. - 9. above do not apply unless specifically adopted in the trust document. It will be apparent that the Cook Islands constitutes an ideal legal enviromnent for asset protection trusts whilst preserving commercial responsibilities to the creditors. ASIACITI TRUST SERVICES Asiaciti Trust Paci?c Limited provides a complete range of international fiduciary services for businesses which utilise offshore locations as a base for their international business operations. We provide a consultancy support service to professional adwsors and their clients. Our extensive experience in offshore financial matters and oru? creative but practical approach enables Asiaciti Trust to assist professional advisors in maximising the profit potential of their clients. This added value concept 10 also ensures that clients enjoy optimum ?exibility in their asset protection and wealth accumulation structlu'es. The Asiaciti Trust Group network of of?ces and contacts in other offshore centres enables us to facilitate global structures for our clients. Speci?cally our services include:- STATUTORY CORPORATE SERVICES formation of international companies and registration of foreign companies under the Cook Islands International Companies Act 1981-1982 - corporate secretarial services as required under the relevant corporate legislation including provision of local or non-resident directors. registered of?ce. nominee shareholders and company secretary including maintenance of statutory records and filing of statutory returns. CORPORATE MANAGEMENT SERVICES general administration services including operation of bank accounts. negotiating trade ?nance. attending to commercial docrnnentation. handling of letter of credit transactions. invoicing. banking. income collection including royalty administration and general representation offshore management services including local administration of captive insurance companies. shipping companies and offshore banks or financial institutions including fiduciary loans. and administration of o?'shore branches of foreign banks accounting services including maintenance of both computerised and manual accounting records. preparation of ?nancial statements and management of bank accounts. TRUST SERVICES registration of trusts under the Cook Islands International Trusts Act 1984 (as amended) trustee services including establishment of inter vivos settlements and acting as trustee of discretionary family trusts acting as trustee or co.-trustee of asset protection trusts. executorship services including appointment as executors and trustees under Wills. or as co.-trustees under Wills. or as co.-trustees under Wills which include offshore assets administration of offshore family trusts and estates nominee facilities for private investments including custodian- ship and acting as escrow agents {mer'i?iun . TRUST - . acting as trustees or alternate trustees of offshore-based employee pension or provident funds rurit trust or offshore mutual fund services including acting as trustee. administrator or custodian of investments provisions of Protector services for trusts in other jurisdictions. INVESTMENT SERVICES private banking services including portfolio management are available through selected international banks and fund management companies. The executive of the Asiaciti Trust Group of?ces listed in the attached directory will be pleased to provide further information on the matters outlined in this brochure or the services provided by Asiaciti Trust. 11