Financial coup for Cook Islands

THE Cook Islands have pulled off an astonishing financial coup: the country has been approved by securities authorities in Hong Kong as an alterna tive offshore domicile for locally listed companies. That means that Hong Kong companies will now be able to incorporate in Rarotonga for tax reasons or in preparation for the handover of Hong Kong to China in 1997 and still work within the colony’s stock exchange laws.

Only two other tax havens, Bermuda and the Cayman Islands, have been approved. Bermuda has proved the more popular of the Carribean offshore centres with many large Hong Kong companies already having their domicile there.

Hong Kong observers said it was unlikely that approval of tax havens would be extended to other offshore centres. The Cook Islands will be extremely attractive to Hong Kong listed companies because of its comparative proximity to the British colony.

The review of the Cook Islands was undertaken jointly by the Hong Kong stock exchange and the colony’s Securi ties and Futures Commission. About one

third of Hong Kong’s listed companies

are incorporated overseas with most of the new services opting for an overseas domicile.

The agreement was reached between the Hong Kong authorities and the Cook Islands Monetary Board. But much of the credit is apparently due to the chief executive of the dominant trust company in the Cooks Mr Trevor Clarke of European Pacific Trust. He told re porters in Hong Kong that the islands offered a democratic system underpinned by English common law and a sophisti cated companies code. This code does not require companies registered in the Cooks to have directors resident in the country, nor that board meetings be held

there. Companies registered in

Rarotonga under the legislation are exempt from income tax, stamp duties, capital gains tax and withholding tax.

Meanwhile, Vanuatu is one of 20 centres being investigated by Britain’s Inland Revenue in efforts to cut down on share dealing by British nationals through these countries. Suprisingly, the Cook Islands, Tonga and Western Samoa are not included in the probe. □