Labuan is a region of Malaysia, which acts as one of the main offshore centers in Asia. This region has become very attractive for the foreign businessmen who want to open a company in Malaysia, due to its taxation regime and business incentives being provided to those opening a business in Labuan. Businessmen can incorporate several types of legal entities in this jurisdiction and our team of company formation representatives in Malaysia can offer assistance on the registration of a Labuan Company, as well as legal advice on the entities which are suitable for a designated business activity.
The Legalities of Labuan
Foreign investors who are interested in forming a company in Malaysia have two main types of companies to choose from in Labuan. It is prescribed by the main rule of law available for this jurisdiction, which is the Labuan Companies Act of 1990. Companies set up in Labuan are registered as offshore ones and they can take the following forms:
Trading companies: import or export companies are included in this category and investors benefit from tax advantages in Labuan.
Non-trading companies: these are used for owning shares in subsidiaries located in other countries.
The Advantages of a Company in Labuan
Enjoy Complete Privacy
Just as most of the offshore jurisdictions, Labuan offers complete protection for foreign investors who are opening companies. This means that information about the shareholders, the managers and company beneficiaries is not publicly displayed. Complete anonymity and confidentiality is provided for companies in Labuan as long as the owners of the same are not subject to a criminal investigation or a criminal record.
(a) Labuan Companies Act 1990
(b) Labuan Financial Securities and Services Act 2010
A Labuan private trust company (PTC) is a Labuan company formed for the specific purpose of acting as a trustee for a group of connected persons and where each beneficiary of the trust established by the PTC is a connected person related to the settlor of the trust. In a PTC, the settlor, members of his family or his advisers can be appointed to the board of directors. The composition of the board can be changed from time to time to bring in members of succeeding generations and in this way, involve them in the management of family affairs.
A Labuan private trust company may only provide the trust company services to the private trust. The types of services to be provided by a Labuan private trust company may include the following:
a. Providing trustee services including review of the trust instrument(s) and the type of assets funding the trust(s), trust management and accounting services;
b. Performing the secretarial duties of the private trust(s), such as lodgement of any documents and reports through the Labuan trust company (appointed Agent) as required under the LFSSA;
c. Carrying out activities such as being an agent, executor or administrator or other activities pursuant to the objectives of the private trust company; and
d. Providing other services as may be approved by Labuan FSA from time to time.
B. CORPORATE FEATURES
Residents and non-residents of Malaysia are permitted to establish a Labuan company.
- Any currency except Malaysian Ringgit (MYR).
- A Labuan company business in not permitted to transact in Malaysian Ringgit (MYR) other than:- (i) For the purpose of defraying its administrative expenses and statutory expenses; (ii) For the holding of investments in a domestic company (iii) For the holding of debt obligations in a domestic company and as specified under Section 7(4) of the Labuan Companies Act 1990
The applicant must appoint a licensed Labuan trust company
- Minimum of one (either individual or corporate entity)
- No bearer shares are allowed
- Shares shall be of no par value
Minimum of one (either individual or corporate entity)
The principal office of a Labuan trust company
Compulsory ( a Labuan trust company shall be appointed as the nominated secretary)
Filed annually not later than 30 days prior to the anniversary of the date of its incorporation
On or before the anniversary date of its incorporation
- Shall be carried out by the Auditors approved by the Labuan FSA
- Account shall kept in Labuan
- All Labuan companies (including branches and subsidiaries) shall maintain all accounting records for a period not less than 6 years from the date an account transaction has been completed
Change in domicile is permitted
There are no publicly accessible records of Labuan companies
- 3% of net audited profits
- No withholding tax, no capital gain tax, no stamp duty on offshore instruments
- The Labuan company that carrying out Labuan business activity that specified in the Schedule of Labuan Business Activity Tax (Requirements For Labuan Business Activity) Regulations 2018 (“LBATR”) shall have the number of full time employees and an amount of annual operating expenditures as specified in the said Schedule of the LBATR.
- A copy of LBATR is available at http://qxgroup.my/legal/LBATR.pdf
- Limited to facilitate meetings with clients and establish contacts with potential clients of the Labuan company
- No maintenance of books and records (including trading activities) shall be done through, from or in the Marketing Office
- Anywhere in Malaysia
- With the exception of insurance brokers and captives, all Labuan companies that have a Marketing Office are required to maintain a Management Office in Labuan.
- Location and address
- The Marketing Office must be segregated and independent from office of other entity/company and has its own phone line, fax machine and computer terminal separate from other entity/company.
- The premise of the Marketing Office should strictly be used for the purposes as specified under paragraph 16(s) and not for personal use or accommodation.
- The number of staff in each of the Marketing Office should not exceed four.
- Name and Signboard
- The name of the Labuan company must be easily legible in Romanised characters, printed on a signboard affixed at the entrance of the Marketing Office.
- The signboard must contain the company’s name, incorporation/ registration number and licensed number (if applicable).
- The Labuan company must also comply with requirements of the relevant local authorities with regard to the signboard and Marketing Office, wherever applicable.
- A copy of the Guidelines on Establishment of Labuan Marketing Office is available at http://qx-trust.com/legal/LMO.pdf
Optional. Please refer to B16
To be audited (Audit fee subject to its volume of transactions)
Role of the Agent
- Labuan trust company acting as agent of the Labuan private trust company shall ensure that it keeps the most recent copies of the following:
- The trust instrument and any deed or document varying the terms of the trust for each relevant trust; and
- The documentation and other information that on which it has relied to satisfy itself that the Labuan private trust company complies with section 74(2)(a) of LFSSA.
- The Agent must ensure the Labuan private trust company restricts its business to providing trust company activities only to members that fulfil the connected party rule as set out in Section 74(2)(a).
Own letterhead and stationery
Kept and made available for inspection in Labuan IBFC
Assets and Valuables that it has received in its capacity as trustee duly separated from its own assets and liabilities
Obtain written consent from Labuan FSA prior to making any change in its directorship and shareholding
Complying Guidelines, Directives and Reporting Requirements issued by Labuan FSA
E. SCOPE OF SERVICES AND FEES
Please contact us to the quotation
Please contact us to the quotation
A Good Option for Foreigners
Investors, who are of the opinion of opening a company in Labuan; they can also set up a trust or a foundation when they need an entity in Labuan that is used for asset protection purposes. For opening a company in Labuan, trust and the foundation is of utmost importance and a company formation agent is one, who is able to help investors with more information, if asset protection is their main target.
The Final Sum-Up
Companies in Labuan are good for a variety of business purposes. Moreover, the fact that they can be easily incorporated, as well as the fact that the requirements are not cumbersome, makes them very attractive to foreign investors.
Businessmen, who are interested in receiving more details on the advantages of a company registered in Labuan, can always contact our team of company formation specialists in Labuan.