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About Labuan

Labuan Company

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Laws & Regulations

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Licensed Entity

Financial Business
  • Leasing
  • Labuan International Commodity Trading Company

Section 86 of Labuan Financial Services and Securities Act 2010 (LFSSA), Labuan financial business includes leasing business.

Leasing business means the business of letting or sub-letting property on hire for the purpose of the use of such property by the hirer regardless whether the letting is with or without an option to purchase the property, including charters of ships,

and for the purpose of this definition, “property” includes any plant, machinery, equipment or other chattel attached or to be attached to the earth

and “charters of ships” means bareboat charters only and does not include the transportation of passengers or cargo by sea or the charter of ships on a voyage or time charter;

In terms of leasing, Labuan had an interesting structure. In many other countries, leasing was only subjected to ships and aircraft but in Labuan, leasing was also open for other types of heavy equipment (including offshore oil and gas structures).

The leasing sector was primarily driven by leasing transactions in the oil and gas, shipping, aviation and telecommunications activities.

Entry Requirements

An application should meet the following minimum eligibility criteria:-

o A Labuan company incorporated or registered under the Labuan Companies Act 1990

o A Special Purpose Vehicle (SPV) set up to facilitate leasing transactions, including inter-company transactions.

Operational Requirements

An approved Labuan leasing company is required to:-

o Maintain bank account(s) under its name preferably in Labuan IBFC and Malaysia to facilitate the leasing operation including lease remittances/lease rental;

o Ensure that the lease agreement is duly stamped and endorsed by the Collector of Stamp Duties, at the Stamp Duty Office, Inland Revenue Board of Malaysia;

o Transact business only in foreign currency and not dealing in Malaysian Ringgit except for the purpose of defraying administrative and statutory expenses or as permitted under Exchange Control Act 1953;

o Notify Labuan FSA of any changes to its constituent documents and business plan within 30 days of the changes being effected;

o Obtain an approval from Labuan FSA on new appointment or change on its directorship and shareholding;

o Notify Labuan FSA on the termination/extension of any leasing transaction within 30 days upon the termination/extension;

o Ensure all leasing transactions and agreements are done through Labuan and adequate and proper records and books of accounts be maintained in Labuan;

o Conduct its business with due diligence and sound principles and comply with the laws and regulations where it services its clients.

o Ensure all its leased assets are adequately insured;

o Ensure that the directors and officers responsible for the management of the company are fit and proper persons pursuant to section 4 of LFSSA and the Guidelines on Fit and Proper Person issued by Labuan FSA;

o Ensure that all leasing transactions with its related party comply with the transfer pricing rules issued by the related party’s relevant authorities; and

o Comply with any other requirements to be issued by Labuan FSA from time to time.

Subsequent leasing transactions with Malaysian residents are subject to Labuan FSA’s prior approval and payment of subsequent transaction fee.

Related Guidelines / Circulars

Guidelines on the Establishment and Operations of Labuan Leasing Business

Clarification Note for Guidelines on the Establishment and Operations of Labuan Leasing Business As at 10 October 2013

Statistical Submission on Leasing Companies in Labuan IBFC

Fees

All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year

Type of Fee

Lease to Malaysian Resident

Lease to Non-Malaysian Resident

Annual Fee

RM 60,000

Nil

Each Subsequent Leasing Transaction

RM 20,000 (One off)

Nil

Read more :

Information

Information (Simplified Chinese)

OCBC Media Release : Leasing Through Labuan Brings Attractive Tax Savings for Shipping Industry

The Global Incentives for Trading (GIFT) programme was launched in collaboration with the Malaysia Petroleum Resources Corporation, aims at positioning Malaysia as a regional trading and storage hub for oil and gas. Under the programme, a set of incentives were offered through the establishment of the Labuan International Trading Commodity Company (LITC) including incentives for traders and trading houses to use Malaysia as their international trading base. The LITC was structured by taking cognizance from the views and demands of the market.

The Labuan international commodity trading business is the trading of physical and related derivative instruments of petroleum and petroleum-related products including liquefied natural gas (LNG), agricultural products, refined raw materials, chemicals; and base minerals in any currency other than Ringgit under the GIFT programme. Trading under the GIFT programme is defined as the buying, selling and/or brokering of the specified commodities.

Entry Requirements

Any qualified person intending to undertake Labuan international commodity trading business under the GIFT programme may apply to Labuan FSA for a licence to carry out such business activities under the GIFT. The qualifying criteria are:

  • Generate a minimum annual total revenue of USD100 million;
  • Spent minimum of RM3 million in annual local expenditure billed to Malaysia entity; and
  • Employ a minimum of three professional traders.

Application Requirements

The applicant must:

  • Establish a Labuan company incorporated and registered under Labuan Companies Act 1990.

Operational Requirements

The applicant:

  • Must have sufficient capital / working funds to commensurate or in accordance with its operations and activities;
  • Must clearly indicate on its letterhead, stationery and other documents including signage containing its name that it is licensed as a "Labuan International Commodity Trading Company" under Labuan Financial Services and Securities Act 2010, together with its licence number;
  • Must maintain its registered office in Labuan, which is the office of the Labuan trust company but is allowed to establish its operational office(s) and operate anywhere in Malaysia;
  • Must ensure that the business is conducted with proper corporate governance and risk management framework is in place; and
  • Comply with other requirements of the Labuan laws and regulation.

Related Guidelines / Circulars

Guidelines on the Establishment of Labuan International Commodity Trading Company under the Global Incentives for Trading Programme

Read more :

Global Incentives for Trading (GIFT) Fact Sheet

Global Incentives for Trading (GIFT) Fact Sheet (Simplified Chinese)

Insurance and Insurance Related Business
  • Insurance
  • Insurance Related Business

Labuan Insurance Business

means insurance business which is not domestic insurance business and which is transacted in foreign currency, and includes takaful and retakaful business, Labuan captive insurance business and such other Labuan insurance business as may be approved by the Authority.

Who can apply for insurance licence?

  1. A Labuan Company
  2. A foreign Labuan Company; or
  3. A branch of a Malaysian insurer.

Labuan Insurance business includes :-

  1. Direct Insurance Life / General
  2. Reinsurance business
  3. Labuan Captive insurance

General Requirement:-

1. Person in control, director and principal officer are fit and proper person

2. Maintain a minimum paid up capital or working fund with a bank in Labuan (Insurance-Related Activities for at least 6 months)

3. Has/will establish its management in Labuan or has/will appoint a licensed underwriting Manager or Labuan Insurance Manager in Labuan.

*For Labuan Captive Insurance, only a Labuan underwriting manager may be appointed.

*For Labuan Insurance Broker, has or undertakes to appoint a Labuan Insurance Manager in Labuan.

4. May set up marketing office in Kuala Lumpur to facilitate meetings and business dealing with clients. The number of staff in the marketing office must balance the number of staff in the Management Office in Labuan (not applicable to captive and insurance broker).

5. Professional Indemnity Insurance Policy (for Labuan Insurance-Related Business)

6. Must provide a Letter of guarantee or undertaking from the parent company.

7. Member of an association of Labuan insurers

Click here for :-

Information

Information (Simplified Chinese)

Guidelines on Valuation Basis for Liabilities of Labuan Life Insurance Business

Guidelines on Valuation Basis for Liabilities of Labuan General Insurance Business

Guidelines on AMLCFT - Insurance and Takaful Sector

Letter to Associations on Guidelines 2013

Guidelines on Investment Management for Labuan Insurance and Takaful Business

Circular on Fraud Prevention Measures for Labuan Insurers and Insurance- Related Companies

Circular on Marketing of Bancassurance Products in Labuan

Guidelines on General Reinsurance Arrangements and Sound Practice

Supplementary Guidelines on Standards of Certification for Labuan Financial Advisors under the Employment of Labuan Life Insurance Broking Companies

Guidelines on the Treatment of Client Monies for Labuan Insurance and Takaful Brokers

Guideline on Co-Location of Labuan Insurance and Takaful Licensee

Guidelines on Captive Insurance Business in Labuan International Business and Financial Centre (Labuan IBFC)

Guidelines On Market Conduct for Labuan Insurance and Insurance-Related Companies

Prudential Framework of Corporate Governance for Labuan Insurance and Insurance-Related Companies

Guidelines on Minimum Audit Standards for Internal Auditors of Labuan Insurance and Insurance-Related Companies

Guidelines on Minimum Requirements for Management Office of Labuan Insurance and Insurance-Related Companies

Guidelines on Application for Licence-Labuan Insurance and Insurance-Related Activities

Guidelines on Insurance Broker

Laws, Guidelines and Circulars published online by Labuan International Insurance Association

Labuan Insurance-Related Activities

  1. Labuan Insurance Manager
  2. Labuan Underwriting Manager
  3. Labuan Insurance Broker
Mutual Fund
  • Private Fund
  • Public Fund

Private fund means a mutual fund:-

  • whose securities are owned or held by:
    • Not more than 50 investors where the first time investment of each of such investors is not less than RM250,000 or such other sum as may be prescribed by Labuan FSA or the equivalent in any foreign currency; or
    • Any number of investors where the first time investment of each of such investors is not less than RM500,000 or such other sum as may be prescribed by Labuan FSA or the equivalent in any foreign currency; or
  • which is designated as a private fund under regulations made under the Labuan Financial Services and Securities Act 2010.

Islamic private funds are private funds with similar definition of the above and are in compliance with Shariah principles.

Notification Requirements

A private fund can carry on its affairs by giving notice in writing of its scope and nature of business to Labuan FSA. The notification shall be accompanied with an information memorandum or such other offering document and should be lodged through a Labuan licensed entity. The information memorandum or such other offering document will be deemed as a prospectus and a lodgment fee of RM2,000 is applicable.

Public funds are mutual funds other than private funds and Islamic public funds are public funds that are in compliance with Shariah principles.

Registration Requirements

No public fund shall carry on business in or from within Labuan unless it has been registered under paragraph 33(1)(a) of Labuan Financial Services and Securities Act 2010 or in the case of Islamic public fund paragraph 38(1)(a) of Labuan Islamic Financial and Services Securities Act 2010. The annual fee payable is RM2,000.

The applicant is also required to submit to Labuan FSA the following:

  • a copy of the memorandum and articles of association/trust deeds/partnership agreement of the fund;
  • audited annual accounts of the promoter, where applicable, for the three years immediately preceding the application;
  • a signed declaration by the directors/general partners of the applicant fund on confidentiality and secrecy;
  • in the event that its proposed minimum paid up capital exceeds RM1 million, if the minimum level of subscription required failed to be received within the stipulated time, all subscriptions shall be repaid immediately;
  • a copy of the draft prospectus incorporating details as required under the Guidelines on Mutual Funds in Labuan;
  • names, addresses and relevant experience of the directors/ general partners/trustees of the fund. The person in control or director or Chief Executive Officer (CEO) of the applicant fund must be a fit and proper person. The appointment of the Board of Directors and CEO requires prior approval from Labuan FSA; and
  • Any other relevant information to the application.

Operational Requirements for Public Fund

The applicant fund:

  • Must appoint a fund manager, trustee, administrator and custodian who are approved by Labuan FSA. In the case of Islamic public fund, a qualified Shariah Adviser to ensure compliance with Shariah principles.
  • Must maintain a registered office in Labuan. For a Labuan fund permitted to be managed by a fund manager from a recognised country or jurisdiction, at least one of the fund-related businesses, such as custodian, trustee or fund administration, must be based in Labuan.
  • Which has been granted provisional acceptance is not allowed to accept subscription monies or make investments until granted registration. It is allowed to use the provisional acceptance only for promotional or marketing purposes.
  • Shall conduct business only in a foreign currency and not in Malaysian Ringgit except solely for the purpose of defraying administrative and statutory expenses.
  • Shall appoint an approved auditor.
  • Must notify Labuan FSA of any amendments or alteration to any of its constituent documents.
  • Must conduct its business with due diligence and sound principles, maintain adequate and proper records and books of accounts and comply with the local laws and regulations where it services its clients.
  • Must indicate clearly its name and licence number on its letterhead, stationery and other documents.
  • Must comply with the requirements with regard to its accounts and the auditing.
  • Must obtain the approval of Labuan FSA for any changes in its business plan.

Fees

All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year. If any of the mutual funds uses a PCC structure, the annual fee would be as follows:

Fees

Amount

Annual Fee RM2,000

PCC Structure

Amount

Core RM5,000
Each cell RM2,000