LABUAN
- EXEMPT COMPANY
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Principal Corporate Legislation
On November 6, 1989, the Government of Malaysia declared the Federal Territory
of Labuan as an International Offshore Financial Centre. The following
statutes apply:
- The Offshore
Companies Act 1990.
- The Labuan
Trust Companies Act 1990.
- The Offshore
Banking Act 1990.
- The Offshore
Insurance Act 1990.
- The Labuan
Offshore Business Activity Tax Act 1990.
- The Labuan
Offshore Trusts Act 1996.
- The Labuan
Offshore Limited Partnerships Act 1997.
- The Labuan
Offshore Securities Industry Act 1998.
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In addition, the
Labuan Offshore Financial Services Authority (LOFSA) has been established
as the sole regulatory body for those statutes.
Type
of Law
The Malaysian legal system is based on the English model. Special laws
applicable to the offshore industry in Labuan have been enacted. Arbitration
is permitted. Disputes are heard in camera. Final appeal lies with the
Supreme Court.
Type
of Company for International Trade and Investment
Offshore company.
Procedure
to Incorporate
Submission to the Registry of the Memorandum and Articles of Association,
consent to act as a director form, Statutory Declaration of Compliance
and the requisite fee.
Restrictions
on Trading
Permitted trading of an offshore company:
An
Offshore Company shall only carry on business in, from or through Labuan.
An Offshore Company may not: carry on business with a resident of Malaysia
except as permitted by the Offshore Banking Act 1990; carry on the business
of Banking or Insurance or such similar business unless it is licensed
so to do under the Offshore Banking Act 1990 or the Offshore Insurance
Act 1990; carry on business in the Malaysian currency except for defraying
its administrative and statutory expenses; carry on business of shipping
or petroleum operations in Malaysia or carry on business as a trust
company.
Exceptions
to carrying on business with residents of Malaysia:-
An Offshore Company is not treated as carrying on business with residents
of Malaysia if it makes or maintains deposits with a person carrying
on business in Malaysia; it makes contact with professional advisers
carrying on business in Malaysia; it prepares and maintains books and
records in Malaysia; it acquires or holds any lease or property for
operational purposes or accommodation of its employees; it holds directors'
or members' meetings within Malaysia; it holds shares, debt obligations,
or other securities in a company incorporated under the Offshore Companies
Act 1990 or in a domestic company, or holds shares, debts obligations
or other securities for the purposes of a transaction entered in to
in the ordinary course of a money-lending business.
Powers
of Company
A company incorporated in Labuan has the same powers as a natural
person.
Language
of Legislation and Corporate Documents
English.
Shelf
Companies Available
No.
Time
to Incorporate
8 days.
Name
Restrictions
Names resembling the name of a company incorporated or registered under
the Companies Act 1965 are not acceptable. Names that in the opinion
of the Registrar suggest Royal or government patronage. Names, which
the Registrar considers undesirable, will be rejected.
Language
of Name
Offshore companies are allowed to have names in a foreign language,
provided they use the Latin alphabet.
Registered
Office Required
Yes, must be maintained in Labuan and must be maintained at the office
of a licensed management company.
Names
Requiring Consent or License
Bank, building society, insurance, assurance, reinsurance, fund management,
investment fund, trust, trustees, Chamber of Commerce, university, municipal
or their foreign language equivalents.
Suffixes
to Denote
Limited Liability Corporation, Incorporated, Limited, Société Anonyme
or Sociedad Anónima or the relevant abbreviations. If the Malaysian
word Berhad is used then it must be preceded by '(L)' to denote that
the company is incorporated in Labuan.
Disclosure
of Beneficial Ownership to Government Authorities
No.
Compliance
Authorized
and Issued Share Capital
The standard authorized capital is US$10,000 divided in to 10,000 shares
of US$1. The minimum issued capital is one share, which may be fully
or partly paid.
Classes
of Shares Permitted
Registered shares of par value, preference shares, redeemable shares
and shares with no voting rights.
Taxation
Offshore Companies that are trading pay 3% on net audited profits or
the sum of RM 20,000. Offshore Companies that do not trade do not pay
tax.
Double
Taxation Agreements
Labuan, being a region of Malaysia, is party to over forty double tax
agreements. The countries include: Albania, Australia, Austria, Bangladesh,
Belgium, Canada, China, Czech Republic, Denmark, Finland, France, Germany,
Hungary, India, Indonesia, Italy, Japan, Korea, Malta, Mauritius, Mongolia,
Netherlands, New Zealand, Norway, Pakistan, Papua New Guinea, Philippines,
Poland, Romania, Saudi Arabia, Soviet Union, Singapore, Sri Lanka, Sudan,
Sweden, Switzerland, Thailand, Turkey, UAE, UK, Vietnam, Yugoslavia
and Zimbabwe.
Financial
Statements Required
A set of accounting records must be kept in Labuan. Non-trading (i.e.
investment and holding companies) and trading companies which elect
to pay tax of RM 20,000 p.a. are not required to file financial statements.
Such
companies are exempt from appointing an auditor if they are not a licensed
offshore bank or insurance company, did not invite the public to subscribe
for shares or debentures or to deposit money with or lend money to the
company and the members of the company have resolved that no auditor
be appointed.
A
trading company, which pays 3% of audited net profits, is required to
appoint an auditor and file audited financial statements.
There
is a filing fee of RM 50 for 'adoption of accounts' and if the accounts
of the Labuan Company has been audited, then there is a filing fee of
RM 50 for the 'lodgement of the said audited accounts'.
Note
that a Labuan Company accounts need not be audited unless the company
wishes to pay 3% of the net profit (as per the audited accounts).
Directors
The minimum number of directors is one. Corporate directors are allowed.
Directors may be of any nationality and need not be resident in Labuan
or Malaysia.
Company
Secretary
A Labuan company must have a resident company secretary, who must either
be an officer or a subsidiary of a licensed Labuan trust company
Shareholders
The minimum number of shareholders is one.
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