Application Requirements

The application should include :

• Information on the nature of business of the applicant;
• A business plan detailing the operations of the applicant with regard to its Labuan entity and the nature of the leasing transactions, including whether the lease will be  conducted with residents or non-residents.
• Audited financial statements for the last two years, if applicable. 
• A copy of the necessary approval from the Malaysian Central Bank to deal with Malaysian residents.
• All members of the Board of Directors and senior management of the leasing company must consist of persons deemed “fit and proper” and prior written approval from Labuan FSA is required before such persons are appointed; 
• Any other information that may be relevant to the application.

Should there be a subsequent leasing transaction, conducted by an established Labuan leasing company, the additional provisions set out below also apply:

• The subsequent leasing transaction is deemed to be an additional leasing agreement other than the original agreement entered by the lessor with the existing or new lessee.
• Each leasing company is allowed to have a maximum of four subsequent leasing transactions, however there is no restriction on the number of property to be leased under one agreement/transaction.
• Should the limit of four subsequent leasing transactions be exhausted and all the transactions remain active, any new leasing transaction must be conducted under a newly incorporated and approved leasing company.
  

Operational Requirements

The applicant company:

Must ensure that all transactions are done through Labuan

• Must maintain proper records in Labuan.
• Must maintain sufficient capital to support operations.
• Must transact in currencies other than the Malaysian Ringgit except as permitted by the relevant legislations and authorities.
• Must conduct its business with due diligence and sound principles and comply with the laws and regulations where it services its clients.
• Must indicate clearly its name on its letterhead, stationery and other documents.
• Must notify Labuan FSA of any changes to its constituent documents, shareholdings, management or business plans.
• Must provide a signed declaration by its directors and senior staff on confidentiality and secrecy.
• Is to submit to Labuan FSA, within three months after the close of each financial year, a copy of its audited annual balance sheet and profit and loss account.
• Is to provide statistics and information as may be required by Labuan FSA in relation to prudential information, general business conduct and volume and direction of business in Labuan.
• Is required to comply with any other requirements issued by Labuan FSA from time to time.

Fees

Once approval is granted by Labuan FSA, the said leasing company is required to make the following payments : 

Type of Fee	Lease to Malaysian Resident	Lease to Non-Malaysian Resident
Annual Fee (before 15 Jan)	RM 40,000	Nil
Each Subsequent Leasing Transaction	RM 20,000 (One off)	Nil

Labuan leasing continued to be the highest growth sector in Labuan IBFC in terms of new approvals granted in 2010, with the number of leasing companies rising by 29.4% to 176 companies (2009: 136). There were 49 new companies established during the year. Six ceased operations due to completion of their lease agreements, while three approvals were withdrawn.

Leasing companies from the Southeast Asia and Pacific region comprised 56.8% of the total number of leasing companies, followed by 21.0% from the Americas and Caribbean. The majority of the foreign-owned leasing companies were established as special purpose vehicles to facilitate their leasing transactions.

The rapid development in the oil and gas sector as well as the aviation sector has led to an increase of leasing activities predominantly for financial transactions in the offshore support services and purchase of aircrafts. This has resulted in an increase of 14.5% in the cumulative amount of assets leased to USD25 billion (2009: USD21.9 billion). Apart from the two main sectors, the telecommunication industry is anticipated to increase its use of Labuan for leasing transactions.

WHAT IS LABUAN LEASING BUSINESS?

Labuan leasing means the business of sub-letting property on hire for the purpose of the use of such property by hirer, regardless whether the letting is with or without an option to purchase the property or such other business as approved by the Minister of Finance. Property includes any plant, machinery, equipment or other chattel attached or to be attached to the earth. With the exception to the transportation of passengers or cargo by sea or letting out on charter of ships on a voyage or time charter basis, leasing companies in Labuan IBFC are allowed to carry on leasing of ships on "bare boat" basis.

WHAT IS THE PROCEDURE FOR SETTING UP A LEASING COMPANY IN LABUAN IBFC?

The applicant must be either a company incorporated or registered under Labuan Companies Act 1990 or a Special Purpose Vehicle company set up to facilitate leasing transactions, including inter-company transactions. It must also apply for a license for the activity.

WHAT FEES ARE PAYABLE FOR A LABUAN LEASING COMPANY?

Once approval is granted by Labuan FSA, the said leasing company is required to make the following payments : 

Type of Fee	Lease to Malaysian Resident	Lease to Non-Malaysian Resident
Annual Fee (before 15 January)	MYR40,000	Nil
Each Subsequent Leasing Transaction	MYR20,000 (One off)	Nil