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Labuan Funds License

Starting Offshore > Labuan Funds License

Brief Overview:

Labuan is the official federal territory of Malaysia. It consists of Labuan Island and six other smaller islands. It is located in the eastern part of Malaysia off the coast of Sabah. Labuan is popularly referred to as an offshore financial center, which offers international, financial and business services. Although English is widely spoken in Labuan, the designated official language of Labuan is Bahasa Malaysia. Therefore, this is an ideal territory for a Labuan Funds License.

Labuan mutual funds can be in form of public funds or private funds which can take the structure of a Labuan company, partnership, a cell company, a unit trust or foundation or a corporation which has been incorporated by the laws of any recognized jurisdiction or country who is a member of the International Organization of Securities Commissions (IOSCO). Labuan Islamic mutual funds shall be operated by Sharia principles.

The act governing the Labuan mutual fund is Part III of the Labuan Financial Services and Securities Act 2010 (LFSSA), while the Labuan Islamic mutual fund is operated under Part IV of Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA) as well as other related guidelines issued as issued by the Labuan Financial Service Authority. All governing guidelines are issued under Section 4A of the Labuan Financial Services Authority Act 1996 (LFSAA).

To establish and license a Labuan private fund, a written notice must be sent Labuan FSA with an information memorandum. This can be sent in through a Labuan trust company, bank including Islamic bank and Labuan investment.

The information contained in the memorandum should provide full and true disclosure of all facts, which will facilitate a reasonable assessment by a prospective investor to determine whether or not to purchase the private fund. In addition to this, the following documents and information must be made available: general description in terms of issuance date, mandate/objective, legal structure, target size of funds geographical focus and tenure also, the Names, address, and other relevant information of the director, general and designated partner, trustee or board members.

Other documents to be sent in include the investment strategy, financial report, and redemption policy. A 3-month duration is required for setting up and completing the application.

Labuan is an emerging market economy and registering a mutual funds company in Malaysia’s federal territory offers the following advantages: a quick and efficient registration process, relatively friendly regulatory requirements, Favorable tax environment which includes a minimum 3% tax to be charged on profits or a flat rate of RM 20,000, no withholding of tax on distributions to investors and the removal of payments of stamp duty on share transfer.

Application Process:

Documents required for a Labuan Funds License:

  • A notarised copy of valid passport
  • Notarized or attested (stamped and/or signed) copy of proof of residential address in English or translated into English
  • Certified bank statement
  • One character reference and two bank references
  • Proof of source of funds
  • Notarized non-criminal records
  • Signed and dated CV
  • Notarized copies of Diplomas

Advantages :

  • Quick licensing process
  • Advantageous tax environment
  • Friendly regulatory requirements compared to other jurisdiction
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