Qualifications

A company that is incorporated or registered under the Labuan Companies Act 1990 (LCA) as a Labuan company or a foreign Labuan company.

Registration Requirements

The applicant for the registration as a Labuan private trust company shall:

• Submit a duly completed Form PTL - Application for Registration to Carry on Labuan Private Trust Company Business as required under Section 74(2) of LFSSA;
• Submit a copy of the draft trust instrument to Labuan FSA;
• Ensure that the directors and officers responsible for the management of the proposed Labuan private trust company in Labuan IBFC are fit and proper persons pursuant to section 4 of LFSSA and the Guidelines on Fit and Proper Person issued by Labuan FSA;
• Provide a letter of undertaking that it shall not carry out any trust company business other than with respect to the private trust(s); and
• Appoint a Labuan trust company as its agent and provide a certified copy of the executed agent's engagement agreement.

Operational Requirements

All registered private trust companies in Labuan IBFC shall:

• Submit a certified copy of the executed trust instrument and any subsequently executed trust instrument;
• Ensure compliance with the Guidelines on Anti-Money Laundering and Counter Financing of Terrorism;
• Notify Labuan FSA on the change in its Labuan trust company agent within seven working days from the effective date of change specified.
• Observe the statutory requirements under the LFSSA;
• Have proper arrangements in place to account for and keep all assets and other valuables that it has received in its capacity as trustee duly separated from the trust company's own assets and liabilities; and
• Comply with guidelines, directive and reporting requirements issued by Labuan FSA.

Labuan private trust company may appoint an external auditor and conduct an annual audit. Nevertheless, it must ensure that all its accounting and other records are properly kept and managed.

Duties of 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 satin Section 74(2)(a).

Annual and Registration Fee

• The registration fee amounting to RM5,000 is payable to Labuan FSA upon the grant of registration for Labuan private trust company.
• The subsequent payment of annual fee is payable not later than 15 January of each year.

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 TRUST?

The concept of a trust is a relationship in which one or more individuals hold another individuals’ assets or property for the benefit of others. The basic concept of a trust involves the person who creates the trust (called a settlor); the person who holds the property for those who benefit (the trustee); those who ultimately receive the benefits of the trust (beneficiary).

In Labuan IBFC, a trust can be set up for a wide range of purposes ranging from discretionary, charity, spendthrift protection etc. One special form is the Labuan Special Trust which can be used to hold shares in a Labuan Holding Company, which in turn may own assets. The benefit of a Labuan Special Trust is that there is a distinct separation between the custodian role of the trustees and the management of the company which is the responsibility of the directors only. LST can be used for succession planning; commercial purposes; and matrimonial settlement.

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.