Labuan Foundation

A Labuan Foundation is a corporate body with a separate legal entity, usually established to hold assets with the objective of managing the assets for the benefit of a class of persons on a contractual basis. A separate legal entity from its managers (i.e. its officers and its council), it is typically used for private wealth management and charitable purposes.

In the case of an Islamic Foundation, the foundation's aims and operations shall be in compliance with Shariah principles.

The structure of a Labuan Islamic Foundation consists of the following:

1. Registered office

A Labuan Foundation must be registered and have a registered office. The administration and operations of a foundation are carried out in accordance with contractual rather than fiduciary principles. Similarly, all relationships within a foundation are contractual and are governed by its governing documents, i.e. the charter and articles.

2. Charter

The charter sets out the parameters within which the Labuan Foundation is to be managed and governed.

3. Key Management

The key management of a Labuan Foundation consists of a council, an officer and a secretary. The council is responsible for the general supervision of the foundation management and ensuring that the purpose for which the foundation was established is fulfilled in accordance with the charter, articles and the law. In effect, the council is similar to the Board of Directors of a company. The duties of the officer are primarily administrative as the officer is responsible for ensuring the proper administration of the foundation. The secretary acts as the service provider to the foundation and performs all secretarial functions including filing and lodging of documents with Labuan FSA.

4. Assets

Assets placed in the Labuan Foundation are owned by the foundation and are to be applied only for the benefit of the identified purpose. However, these assets must be non-Malaysian properties unless it is a charitable foundation or as approved by Labuan FSA.

5. Beneficiaries

This may include individuals, corporate entities or charities and are those who have vested interest in the assets of the foundation. Unless specifically provided in the charter or articles, beneficiaries have no rights to the foundations assets and are not owed any fiduciary duties.

6. Dissolution

A Labuan Foundation can be dissolved upon the passing of a resolution by the officer on the basis that the foundation is established for a definite period and that period has expired; the purpose of the foundation is fulfilled or becomes incapable of fulfilment; or the charter requires such dissolution. After the dissolution, the ownership of the remaining assets will be transferred to the beneficiary

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 the 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 :

1. Form 8 "Application for Registration of a Labuan Foundation" which  includes the following particulars:
   1. The Foundation's name
   2. The date of the Charter
   3. The purpose and objects of the Foundation
   4. The date of the Foundation's articles, if any, and the date of any amendments made to the articles
   5. The name and address of the secretary
   6. The address of the registered office of the Labuan Foundation
   7. The duration of the Labuan Foundation
   8. An original copy of the Charter

2. Form 9 "Declaration by Labuan Trust Company as Secretary" that includes a statutory declaration by the secretary regarding compliance by the foundation with the Labuan Islamic Financial Services and Securities Act 2010 and the Labuan Foundations Act 2010.

To establish a Labuan Islamic Foundation, the following shall be observed:-

1. The Memorandum of Association states that the aims and operations of the Labuan Islamic Foundation will not involve any element which is not in compliance with Shariah principles;
2. 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 and operations of the Labuan Islamic Foundation and ensure compliance with Shariah principles.

4. Fees

    

   Type of Fees	Amount
   Registration Fee	RM750	USD200
   Annual Fee	RM750	USD200
   Redomiciliation	RM750	USD200

    
    

   Governing Legislation

   Labuan Foundations Act 2010