Offshore LLC Formation

Organizing a foreign limited liability company is a straightforward exercise in assembling and delivering papers.

The first step is to decide where the papers should go. That means choosing the country where your LLC should be organized and then selecting a particular company-formation service.

The company formation service you hire will have know-your-customer rules, which usually are rules imposed by local law. Expect the service you are dealing with to ask for your full name, address and date of birth. You also will be asked about the nature of your business or employment, the source of the assets that you intend to transfer to your LLC and the identities of any other persons who will own a substantial share of the company.

In addition to the information itself, expect the company formation service to require:

  • A notarized copy of your passport or driver’s license.
  • An original (or notarized copy of) a utility bill that shows your name and a physical residential address. (A post office box won’t do.)

You may be asked to provide the same kinds of documents for other intended owners (if any) of the LLC.

Jurisdiction for LLCs

By a big margin, the best jurisdiction for forming an offshore LLC is the Cook Islands. The reasons are:

Legal certainty. Cooks Islands law provides statutory certainty that the only remedy available to the creditor of a Member of an LLC is a charging order, i.e., the Member’s interest in the LLC cannot be taken in a foreclosure.

Legal flexibility. You have virtually a blank slate to write whatever Operating Agreement you like. This allows you to, among other things, divorce ownership from control to whatever extent you want — which can be an important advantage for estate planning and for some asset protection strategies.

Social stability. Unlike many of the competing jurisdictions, the Cook Islands is not a former slave plantation. It is socially a healthy place — which supports high professional standards and long-term political stability.

Genuine independence. Again unlike many of the competing jurisdictions, the Cook Islands really is a sovereign country and is not subject to outside pressure. It does not depend on the U.S. for airline connections, for banking connections, for aid or for anything else. The Cook Island has demonstrated again and again that they will not abandon clients to any court or other agency of a foreign government.

Reasonable costs. In some jurisdictions it may cost $2,000 or $3,000 per year to maintain an LLC. In the Cook Islands it can be done for less than $1,000.

Accessibility. The Cook Islands is in the same time zone as Hawaii and as far south of the Equator as Hawaii is north of it. The main island of Rarotonga can be reached by a non-stop flight from Los Angeles International Airport.

Service for LLC Formation

In the Cook Islands, only a licensed trust company may provide formation and maintenance services for limited liability companies. The busiest, and by my experience, the best of them is Southpac Trust International. The staff are highly professional, and the company’s focus is on U.S. clients. They understand what Americans are looking for.

Southpac can organize a standalone LLC for you, or if your plan calls for using an LCC to hold investments for your international trust, they can organize the LLC in connection with setting up the trust.

For a standalone LLC, start by requesting Southpac’s LLC formation questionnaire.

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