Characteristics of Labuan Foundations

• No minimum capital is required to register a foundation in Labuan.
• A Labuan Foundation exists ‘in perpetuity’ as there are no period rules in the Labuan Foundations Act 2010, this provides continuity of the foundation at the discretion of the founder.
• A key attraction of the Labuan Foundations Act 2010 is that it provides reserve powers to the founder, providing the founder more control compared to a settlor of a trust. Additionally, since a founder may also be a council member, he may further direct and manage the foundation’s assets.
• All aspects of the foundation is kept confidential except for the charter.
• There is no statutory requirement for an audit unless ordered by the Court.
• A foundation established in another jurisdiction can be legally redomiciled to Labuan and vice versa, provided that the other corresponding jurisdiction permits.
• A Labuan Foundation is protected from foreign claims and cannot be forcefully liquidated to satisfy other obligations such as claims arising from divorce, lawsuit or creditors.
• As the Foundation is a separate legal and corporate entity, all liabilities remain corporate liabilities of the foundation. 
• Council members do not owe fiduciary duty to beneficiaries and hence, this eliminates competing beneficiaries interests. 
• Officers, council members, supervisory person and the Foundation’s secretary benefit from statutory indemnification for liabilities incurred by the foundation unless the liabilities arise from personal negligence or there is proof of bad faith on the part of the officer.
• Confidentiality provisions restrict the officer, council member, supervisory person and secretary from disclosing any information relating to the foundation unless otherwise required or provided for by law, the court or the charter.
• All Labuan Foundations are expected to carry on business in any currency other than the Malaysian currency except as permitted by the relevant authorities.

Entry Requirements

• Every Labuan Foundation must be registered with Labuan FSA.
• Application for registration must be made by a Labuan trust company (i.e. secretary of the foundation) to Labuan FSA. Following acceptance of the required documentation by Labuan FSA and the payment of the required registration fee, a certificate of registration will be issued.
• The following completed forms must be submitted to Labuan FSA:
  a)    Form 8, “Application for Registration of a Labuan Foundation” which  includes the following particulars:
  
  1. The Foundation’s name
  2. An original copy of the Charter 
  3. The date of the Charter
  4. The purpose and objects of the Foundation
  5. The date of the Foundation’s articles, if any, and the date of any amendments made to the articles
  6. The name and address of the secretary
  7. The address of the registered office of the Labuan Foundation
  8. The duration of the Labuan Foundation
  b)    Form 9, “Declaration by Labuan Trust Company as Secretary” that includes a statutory declaration by the Secretary regarding compliance by the Foundation with Labuan Financial Services and Securities Act 2010 or the Labuan Islamic Financial Services and Securities Act 2010 and the Labuan Foundations Act 2010.

Please note that in order to establish a Labuan Islamic Foundation, the following shall be observed :

• The Memorandum of Association must state that the aims and operations of the Labuan Islamic Foundation will be in compliance with Sharia principles
• The officers of a Labuan Islamic Foundation shall appoint a qualified person as a Shariah adviser, or consult a qualified person, who shall advise the Labuan Islamic Foundation on the management of the said Foundation according to Islamic principles
• The actual operations of the Labuan Islamic Foundation must be in compliance with Shariah principles.

Fees
Registration fee	MYR 750
Annual fee	MYR 750
Approval for change of name	MYR 250
Restoration to Register	MYR 750
Redomiciliation from another jurisdiction	MYR 750

Fee imposed for search or inspection of any document kept by Labuan FSA:
By the founder, beneficiaries, counsel and officers	MYR 200
By others	MYR 200

WHAT IS WEALTH MANAGEMENT?

Wealth management is the provision of tailored financial solutions across a wide range of specialities, including asset protection, estate planning, legal resources, taxation advice, investment management and other tailored banking solutions with the goal of sustaining and growing long term wealth, to provide high net-worth individuals and families.

WHAT IS A FOUNDATION?

A Foundation is the Civil Law version of a trust which operates under Common Law. However Foundations share many similarities with trusts although there are also differences between the two, which are tabulated below.

ARE TRUSTS OR FOUNDATIONS REQUIRED TO REGISTER WITH LABUAN FSA FOR THEIR SET UP IN LABUAN IBFC?

Trusts do not have to register with the regulator but foundations must do so. Trusts, however, must use a Labuan trust company as one of their trustees.

WHO CAN SET UP A LABUAN TRUST?

A resident or non-resident can do so. In the case of a non-resident, Malaysian property can be injected into a Labuan trust while a Malaysian resident can place international assets into a Labuan trust but Malaysian property requires the approval of the regulator, Labuan FSA.

WHAT WEALTH MANAGEMENT SOLUTIONS ARE AVAILABLE IN LABUAN?

Labuan IBFC offers trusts (governed by common law) and foundations (under the civil law code), both types of which can be applied in an Islamic manner as long as they subscribe to Shariah principles. Both trusts and foundations are highly flexible, covering many types to suit different needs.

WHAT IS THE DIFFERENCE BETWEEN A TRUST AND A FOUNDATION ?

Trusts and foundations are differentiated as follows:

Trusts	Foundations
Common law origins.	Civil law origins.
Relationship amongst parties is fiduciary.	Relationship amongst parties is contractual.
Assets, upon being vested in the trust, are legally owned by the trustee.	Assets are legally owned by the foundation. Upon registration of the foundation, the property endowed or to be endowed becomes an estate separate and apart from that of the founder by acquiring a separate legal entity status.
The person who establishes the trust is known as the settlor and the persons who benefit from the trust are known as beneficiaries.	The person(s) who creates the endowment is known as the founder and the persons who benefit from the endowment are known as the beneficiaries.
The trust deed is the document that establishes the trust.	The charter is the main constituent document of a foundation. A foundation may also have articles which are a set of more detailed rules governing its administration matters.
The appointed trustee is the person responsible to hold the trust assets and administer the trust.	An appointed body called the Council is entrusted to carry on the business and affairs of the foundation and pursue its objects. Officers and Council are required to act in accordance with the terms of the charter and articles.
Registration of the trust is not mandatory.	Registration of the foundation is mandatory.
The settlor  has certain reserved powers after establishing the trust and vesting the legal title in the trust assets to the trustee.	The foundation does not have a share capital, does not recognize shareholders and the founder does not retain or acquire any ownership rights in relation to the foundation's property. The law does recognize however, the beneficiaries or the persons in whose benefit the foundation is created, which can include the founder.
A trust can be established for any lawful purpose but a trust that is set up for a purpose must appoint an enforcer.	A foundation can be established for any lawful purpose which shall be spelt out in the charter of the foundation.
There is no capital requirement for trusts.	There is no capital requirement for foundations.