Cook Islands Trustee Licensing Requirements

Every company that conducts trustee company business in the Cook Islands must hold a license issued by the Financial Supervisory Commission under the Trustee Companies Act 2014. It is a criminal offense for an unlicensed entity to carry on trustee company business. There are no exceptions for foreign firms, informal arrangements, or companies claiming equivalent licensing from other jurisdictions.

This licensing requirement is the regulatory foundation of the Cook Islands trust industry. It determines which companies can act as trustee, what capitalization and insurance they must maintain, who can serve as directors and officers, and how the FSC supervises ongoing operations. For clients establishing a Cook Islands trust, the licensing framework is the primary mechanism ensuring that the company holding legal title to their assets meets minimum standards of financial stability, professional competence, and regulatory accountability.

What Constitutes Trustee Company Business

The Act defines trustee company business as the provision of registration services to one or more offshore entities. A company provides registration services if it registers an offshore entity under any Cook Islands law, provides a person or service that Cook Islands law requires to be provided by a licensed trustee company, or provides trustee or fiduciary services.

Offshore entities include any trust, company, LLC, foundation, partnership, or other structure established under the International Companies Act 1981–82, International Trusts Act 1984, International Partnership Act 1984, Limited Liability Companies Act 2008, Foundations Act 2012, or licensed under the Insurance Act 2008, Banking Act 2011, or Captive Insurance Act 2013.

The definition is broad. It captures not only companies acting as trustee of international trusts but also companies that register LLCs, foundations, or international companies on behalf of clients. This means the same licensing framework governs the full range of Cook Islands offshore entity administration.

Licensing Requirements

A company seeking a trustee license must satisfy several requirements before the FSC will grant authorization.

Incorporation. The applicant must be incorporated under the Cook Islands Companies Act 1970–71 or registered as a foreign company under that Act. Foreign ownership is permitted but requires registration with and approval from the Cook Islands Business Trade and Investment Board under the Development Investment Act 1995–96.

Minimum capitalization. The licensee must maintain paid-up share capital of at least NZD 250,000. This requirement ensures the trustee has a financial base independent of client fees, providing a buffer against operational disruption and a meaningful stake in the jurisdiction.

Fit and proper person clearance. All key persons—shareholders, directors, anyone with executive control, and compliance officers—must be individually approved by the FSC as fit and proper. This involves background checks, regulatory history reviews, and assessment of professional competence. The requirement applies to each individual, not just the company collectively.

Professional indemnity insurance. The licensee must maintain professional indemnity insurance covering negligence, errors, omissions, and employee dishonesty. The minimum coverage must equal at least three times the company’s annual trustee business fee revenue or thirty times the annual fee revenue from its largest client, whichever is greater. Coverage does not need to exceed NZD 10,000,000. The 2014 Act eliminated the right to self-insure, meaning all trustees must obtain coverage from external insurers.

Physical presence or managed arrangement. The licensee must either establish a physical office in the Cook Islands or have its license and business managed by another licensed trustee company that maintains a physical presence. This requirement ensures that at least one layer of Cook Islands–based personnel and operations exists for every trust administered under Cook Islands law.

Annual licensing fee. A fee of NZD 5,200 is payable upon application and annually thereafter.

Ongoing Regulatory Obligations

Licensing is not a one-time event. The FSC maintains ongoing supervisory authority over all licensed trustees, including annual audited financial statement requirements, periodic regulatory examinations, minimum record-keeping standards, periodic reconciliation of client funds, and compliance with anti-money laundering and counter-terrorism financing legislation.

The FSC can revoke a license if the trustee fails to meet ongoing requirements. This supervisory authority means that a trustee’s license status reflects current compliance, not just the qualifications that existed at the time of licensing.

Managed Trustee Companies

The Act allows for managed trustee companies—firms that hold a license but do not maintain their own physical presence in the Cook Islands. Instead, a managed trustee company has its operations administered by a licensed trustee company that does maintain a physical office. The managed trustee company must still submit a full licensing application, satisfy the same regulatory and AML requirements, and is subject to the same ongoing supervision.

This structure allows new entrants to develop their business before committing to a full physical presence. It also means that some licensed trustees operate through the offices and personnel of other licensed trustees, which clients should understand when evaluating the institutional independence of their trustee.

Private Trustee Companies

The Act provides one limited exception to the licensing requirement. A Cook Islands international company (incorporated under the International Companies Act 1981–82) does not carry on trustee company business if it acts as trustee of no more than three Cook Islands international trusts. This exception allows families to establish private trustee companies that maintain direct management and control over their trust structures without obtaining a full license.

Private trustee companies are popular among families who want to retain governance over trust administration rather than delegating entirely to an institutional trustee. In practice, the PTC’s administration is often outsourced to a licensed trustee company that handles compliance, record-keeping, and regulatory obligations on behalf of the PTC.

An individual, company, or other entity not ordinarily resident in the Cook Islands can also act as co-trustee alongside a licensed trustee. This flexibility allows trust structures to combine Cook Islands regulatory compliance (through the licensed trustee) with the settlor’s preferred co-trustee arrangements.

Why Licensing Matters for Clients

The licensing framework exists to protect clients, not just to regulate trustees. Each requirement addresses a specific risk that trust clients face: minimum capitalization reduces the risk of trustee insolvency, professional indemnity insurance provides recourse if the trustee acts negligently, fit and proper person requirements reduce the risk of unqualified or disreputable individuals controlling trust assets, and ongoing supervision ensures that the trustee continues to meet standards after the initial license is granted.

When evaluating a Cook Islands trustee, clients should confirm that the company holds a current FSC license, understand whether it operates through its own physical presence or through a managed arrangement, and verify that the company maintains the required insurance coverage. These are baseline requirements—they establish a regulatory floor, not a ceiling. The qualitative differences between trustees in areas like litigation experience, communication quality, banking relationships, and institutional depth exist above this regulatory minimum.

For guidance on evaluating trustees beyond licensing requirements, see how to choose a Cook Islands trustee. For an overview of the licensed trustee companies currently operating, see the Cook Islands trust companies overview. For a comparison of Cook Islands trustee regulation to other offshore jurisdictions, see regulation compared to other jurisdictions.