The Labuan Companies Act 1990 requires the intended Labuan company to employ the services of a Labuan IBFC registered trust company to act as its incorporation agent. Among the services offered by a trust company are:

• The provision of a registered office, resident secretary and director
• The performance of secretarial duties of the Labuan company including lodgment of any documents required under the Labuan Companies Act 1990
• The  general management of all Labuan Companies and licensed entities

Registration Procedures

The  general process for registering a Labuan company are as follows:

• The applicant must appoint a trust company for the registration
• The trust company appointed would then conduct its due diligence on the applicant
• The applicant must reserve its company name. It may choose any name; however Labuan FSA has the discretion to reject the name. The company name will be reserved for a period of three months
• The name shall contain any word or abbreviation thereof in the national language of any country that denotes a company limited by shares or guarantee
• The name of a Labuan company may be written in any language, alphabet or characters. However, a translated version of the name  in the English language must be provided
• When registering the company, the application must be accompanied by the Memorandum and Articles of Association of the proposed company, a statutory declaration by an officer of the appointed trust company, and consent in writing of the person(s) to be appointed as director(s) of the company, together with the relevant fees
• For activities that require licensing, prior approval must be obtained to undertake such activities
• All submission of forms or other documents under the Labuan Companies Act 1990 is done on-line 
• Registration by the Registrar is generally completed within 24 hours.

Please note that the procedures detailed above applied for both Labuan companies and foreign Labuan companies.

*Fees (to show USD based on RM3.05 = USD1)

Elements of Registration Cost

Registration fee (Depends of amount of Paid up capital)

Setting Up a Marketing Office in Kuala Lumpur and Johor Bharu

Application Requirements

All Labuan companies must submit through their respective trust companies, the following minimum information towards the application:

• Purpose of the Marketing Office
• Business plan of setting up the Marketing Office
• Organisational Chart, and
• Biodata of the managerial level at the Marketing Office.

All applications should be directed to the Director General, Labuan FSA and Labuan FSA reserves the right to revoke the approval due to non-compliance with Labuan FSA’s and other regulatory requirements.

Operational Requirements

Location and address

• The Marketing Office must have an address.
• The entry door of the said office should only lead to the office and is independent of any other entities.
• The premise should not be used for personal use or accommodation.

Staff

The number of staff in each of the Marketing Office should not exceed four.

Signboard

The name of the Labuan company must be printed and affixed in a conspicuous position, in romanised letters, easily legible on the premise and must be in compliance with the local authority’s laws and regulations. Specifically, the signboard must contain the following information:

• Company name and registration number
• License number, if any
• Address, telephone and facsimile numbers

Reporting Requirements

The company is required to submit a half-yearly report comprising the organisational chart and business activities for the past six months, before the 15th of the following month.

Annual Fee

The annual fee of RM5,000 will be imposed for each Marketing Office in Kuala Lumpur and Johor Bahru.

Co-Located Labuan Holding Companies

Application Requirements

All applications for the setting up of a Labuan Holding Company should be directed to the Director General, Labuan FSA and should include, amongst others the following information:

• The proposed name of the Labuan Holding Company
• Nature of business of the applicant
• Business plan of the said company, including the purpose of co-locating the office under this Guideline
• Organisation chart of the proposed office in Kuala Lumpur including the estimated number of staff
• Information on director(s) and shareholder(s) of the applicant Company
• Biodata of the proposed Principal Officer who will be managing the office. “Principal Officer” means the principal executive officer of the company by whatever name it is referred to and whether or not he is a director and who is accustomed to act under the instructions of the applicant.

Notwithstanding the above; Labuan FSA may request additional information for the purpose of processing the application.

Operational Requirements

• A Labuan Holding Company is required to inform Labuan FSA the address and contact numbers of its office in Kuala Lumpur prior to the commencement of its operations and any subsequent changes to this address.
• The office of the Labuan Holding Company in Kuala Lumpur must be:
  
  • separated from the office of other entity/company; and
  • managed by its own personnel with independent books and records.
• The name of a Labuan Holding Company must be easily legible in Romanised characters, printed on a signboard affixed at the entrance of the office. The signboard must contain the following information:
  
  • the Labuan Holding Company’s incorporation number, and
  • the words “Labuan Company”.

In addition, the Labuan Holding Company must also comply with requirements of the relevant local authorities, whenever applicable, with regard to the signboard.

Directors and Principal Officer

A Labuan Holding Company shall appoint a minimum of one (1) director of any nationality, however no corporate director is allowed. In addition, the Labuan Holding Company is required to notify Labuan FSA of any change of its Principal Officer.

Other key requirements for a Co-located Holding Company

• It must have sufficient paid-up capital to commensurate, or in accordance, with its operations and activities.
• It must make an irrevocable election to be taxed under the Income Tax Act 1967 pursuant to Section 3A of Labuan Business Activity Tax Act 1990. Hence, the Labuan Holding Company is required to :
  a) comply with the provisions of the Malaysian Income Tax Act 1967;
  b) submit an annual audited accounts to Labuan FSA; and
  c) conduct an Annual General Meeting in Malaysia.•   
  
• A Labuan Holding Company must provide statistical information to Labuan FSA in a manner and frequency as may be determined by Labuan FSA.
• Subject to relevant provision of the laws relating to disclosure of information, the Labuan Holding Company will provide Labuan FSA with any information relating to its business and operations whenever it is required.
• To comply with other requirements of the Labuan Companies Act 1990 and the relevant laws, whichever applicable, including obtaining work permit from the Immigration Department of Malaysia for expatriates employed by the Co located Labuan Holding Company in Malaysia.

Revocation and Surrender

• Labuan FSA reserves the right to revoke the approval if Labuan FSA is satisfied, based on the information made available to it, that the Labuan Holding Company has not complied with any laws or requirements.
• Notwithstanding the above, the Labuan Holding Company may surrender the approval under this Guideline by notifying Labuan FSA in writing not less than one (1) month from the date it intends to close the office.

Annual Fee

An annual fee of MYR7,000 (approx. USD 2,300) is payable once approval for the Labuan Holding Company is given by Labuan FSA. The subsequent payment of annual fee is payable by on or before 15 January of each year during which the approval is valid.

In 2010, 581 new companies were registered representing an increase of 4.7% from 555 new companies in 2009. In terms of cumulative number, Labuan companies grew by 7.8% to 8,004 compared to 7,423 in 2009.

The Labuan companies registered in Labuan IBFC originated from about 100 countries. This wide spectrum of countries reflected the continued acceptance and confidence from local and foreign investors towards Labuan as an international business and financial centre. Labuan companies were established mainly to carry on trading and non-trading activities including investment holding and special purpose companies. There was an equal distribution in terms of numbers of trading and non-trading companies.

The breakdown of companies originating according to region showed that the Southeast Asia and Pacific region continued to dominate with 57.1% (2009: 57.4%) mainly from Malaysia, Indonesia, Singapore and Australia. This was followed by the Far East region, namely, Hong Kong, Taiwan, Korea, Japan and The People's Republic of China that made up 15.2% (2009: 15.7%). Representation from Europe stood at 13.8% (2009: 13.6%) with the Americas accounting for 9.9% (2009: 10.5%), while the Middle East and Africa increased to 4.1% (2009: 2.7%).

Operating Labuan Companies- Breakdown of Origin by Countries

HOW DO I ESTABLISH A LABUAN COMPANY?

Incorporation of a Labuan company must be done through a Labuan Trust Company. The application should be submitted together with the Memorandum and Articles of Association, consent letter to act as director, statutory declaration of compliance as well as payment of registration fees based on authorised capital.

Please click here for the list of licensed Labuan trust companies.

WHAT ARE THE DIFFERENCES BETWEEN TRADING AND INVESTMENT COMPANIES?

Investment companies usually only “hold” assets, or shares in companies located in other jurisdictions. Trading companies are defined as those which actually carry out business on a day to day basis.

WHAT FEES ARE PAYABLE FOR THE ESTABLISHMENT OF A LABUAN COMPANY?

The annual fee to be paid to Labuan FSA is MYR1,500 for a Labuan company and MYR5,300 for a foreign company that wishes to establish a branch in Labuan. While the cost of incorporation or registration differs depending on the size of capital as illustrated in the table below:

Registration Fees

* Based on exchange rate of USD1 = MYR3.05

ARE THERE ANY REQUIREMENTS ON MINIMUM CAPITAL AND SHAREHOLDING?

A minimum of one share is required. Apart from this there is no minimum capital requirement, and Labuan companies may issue shares of different classes and of different rights but no bearer shares are allowed. Shares may be denominated in any currency except in Malaysian Ringgit.

The minimum number of shareholders in an offshore company is one (1). The shareholder may be an individual, a corporation or a trust company holding the shares as a nominee, or on trust.

WHAT IS THE COMPOSITION OF DIRECTORS AND SECRETARIES IN A LABUAN COMPANY?

A Labuan company must have at least one director who can act as a resident director and a resident secretary.

ARE THERE ANY AUDIT REQUIREMENTS?

A Labuan company is required to maintain proper accounting and other records in Labuan, and those proper accounting and other records shall be kept at the registered office of the company or other places in Labuan. Such accounting and other records shall be open at all times for inspection by a director of the offshore company.

WHAT TAXES ARE PAYABLE IN LABUAN IBFC?

The Labuan Business Activity Tax Act 1990 encapsulates the jurisdiction’s tax structure and provides all Labuan registered trading companies the yearly option of either paying a flat tax of MYR20,000 per annum or 3 percent of net profit. Labuan investment holding companies, non trading companies and investment entities are not subjected to tax on investment income.

There is also an option for all Labuan trading entities and companies to make an irrevocable election to be taxed under the onshore Malaysia Income Tax Act 1967.

DO I NEED A PHYSICAL PRESENCE IN LABUAN?

Yes. Labuan companies are required to engage the services of a Labuan Trust Company, which company will serve as the registered office.