LABUAN PRIVATE FOUNDATION

 

Founder	a. The main controller who retains all power of the Foundation reserves the right to change the Charter of the Foundation b. Minimum one, either a natural person or corporate entity c. Subscriber to the Charter d. Maybe residents or non-residents of Malaysia e. May also be a council member and one of the beneficiaries
Beneficiaries	a. Can be individuals, corporate entities or charities and anyone that have vested interest in assets of the foundation b. Maybe residents staying in Malaysia or non-residents staying outside Malaysia c. All beneficiaries have to be specified in the Foundation Charter or articles, to have their rights to the foundation’s assets
Officer	a. Compulsory appointment b. One or more must be appointed by Founder prior to registration of the foundation c. Maybe either a natural person or corporate entity d. Maybe residents or non-residents of Malaysia e. Founder or Beneficiary may be appointed as Officer (but not be a council member at the same time) f. Duties are inter alia to ensure proper administration of the foundation and to carry out decisions of the Council
Council Member	a. Not a compulsory appointment, at the discretion of the Founder b. If appointed, one or more, either a natural person or corporate entity c. Maybe residents or non-residents of Malaysia d. Cannot act as Officer at the same time e. Council is similar to the Board of Directors in a company context. The council is responsible to manage and oversee operations (general supervision) of the foundation by its officer and to ensure compliance by the Labuan foundation and its officer with the charter of the foundation and provisions of the LFSA. f. Council members supervise Officers of the foundation. The council’s decision must be in line with the objectives and purposes for which the foundation was established g. Council members do not owe the fiduciary duty to beneficiaries and hence, this eliminates competing beneficiaries interests
Secretary	a. A compulsory appointment must be a licensed Labuan Trust Company b. Acts as a service provider to the foundation and perform a compliant agent function and acts as a conduit between Foundation and Labuan FSA
Supervisory Person	A protector or supervisory person may be appointed by the founders. These parties may monitor the Council’s decision, the power to add or remove Officers, Council members etc.

1. 1. Maintain a Registered Office in Labuan, which can be the Trust Company‘s office.
   2. No capital requirements as Labuan Private Foundation can start with only a minimum endowment of USD 1.00 as an initial asset at the time of establishment.
   3. Legal Status
      • It is a legal entity with rights and status of a separate and independent person
      • It can be a shareholder of a company
      • It can enter into contracts, buy and sell properties, own bank accounts or own shares or interest in other corporations
      • For purposes of minimizing risk, it is encouraged that all trade activities (if any) should be carried out through an underlying company or partnership. Trade or commercial activities are incidentals or ancillary to its main purpose which is the management of its property.
   4. Duration of the Labuan Private Foundation may be fixed or infinite lifespan.
   5. Carry on business in any currency other than Malaysian Ringgit except as permitted by the relevant authorities.
   6. Types of Property, Assets permissible to be endowed into Labuan Private Foundation
      1. Assets of every kind whether corporeal or incorporeal, tangible or intangible, movable or immovable, however, acquired may be endowed to a Labuan Private foundation;
      2. Legal documents or instruments in any form, including electronic or digital, evidencing title to or interest in, such assets as described in the above (a) including bank cheques, money orders, shares, securities, bonds, bank drafts and letters of credit;
      3. Property of the Labuan Foundation is owned legally and beneficially by the foundation and is to be utilised solely for the purposes and objects stated in the charter of the foundation;
      4. Property of the Labuan Foundation can be Malaysian and/or non-Malaysian property.
   7. Malaysian Property endowed to Labuan Private Foundation must have prior approval from Labuan FSA. The qualifying criteria for approval shall include the Malaysian property(ies) but not limited to the following:
      1. To obtain all necessary approvals from the relevant authorities in relation to the endowment of property(ies) to the foundation;
      2. Property(ies) to be endowed shall be obtained through lawful means.
      3. Property(ies) endowed or to be endowed to the Labuan Foundation must include consent letters from relevant authorities, where necessary, to be submitted with the application or within 60 days from the registration date of the endowment of the property(ies). The relevant authority(ies) in this context may include the respective land office or local authority such as Bank Negara Malaysia, Companies Commission of Malaysia and Securities Commission of Malaysia.

Malaysian founders are free to endow Malaysian property  to the foundation as permitted by Foreign Exchange Administration (FEA). However, it is required to provide in the charter that any subsequent conversion or transfer of the endowed property for investment abroad would need to comply with FEA rules.

• Creditors' claims

  Being a separate legal entity, if the transfer of assets was completed prior to the claim arising, the assets are beyond the reach of a creditor’s claim against the Founder. It is important that the transfer of assets:

 

1. 1. takes place before the creditor’s cause of action is accrued
   2. takes place two (2) years from the date of registration
   3. must not render the Founder’s insolvent; and
   4. must be made without any intent to defraud the creditor
2. Accounts of Labuan Private Foundation

   All accounting records and other records shall be maintained in Labuan. They must be made available for inspection by the council members, supervisory person, officers and the approved auditor if appointed.