LABUAN PRIVATE FUND
The Labuan jurisdiction is one of the most ideal places to get started for foreign investors considering to raise funds or become a venture capital, especially if the target is within the Asia Pacific region. One should consider using a Labuan Mutual Fund especially for funds raised through crowd-funding platforms instead of splitting the investors by equity.
Depending on the objectives and the types of investors to attract, Labuan offers both Public and Private Fund which is meant to:
- Collect and pool funds for the purpose of collective investment with the aim of spreading out the investment risks
- Issues interests in a mutual fund which entitles the holder to redeem his investments agreed upon by the parties and receives an amount computed by reference to the value of a proportionate interest as a whole or part of the net assets of the aforesaid types of entities, as the case may be, and includes an umbrella fund whereby interests in a mutual fund or units are split into a number of different classes of funds or sub funds and participants are entitled to exchange rights in one part for rights in another.
The private fund is often used as a hedging and investment vehicle by private investors. Labuan Private Fund allows a collective pool of monies to be created for investment in various objectives such as:
- Equities & Shares
- Forex & Money Markets
- Commodities/Real Estates
- Development Projects
- Land Acquisitions
- Business Projects
- Business Acquisitions
2 Types of Labuan Private Funds
KEY ADVANTAGES OF A LABUAN PRIVATE FUND
- FLEXIBLE STRUCTURE – in the form of Labuan company, partnership, protected cell company, foundation or unit trust
- SUPPORT MULTICLASS FUND – multi-currency / asset class
- HASSLE-FREE SET UP – Entry and Exit
- LOW MINIMUM CAPITAL requirement per investor!
- Low Tax at ONLY 3%!
- NO TAX for Investment Holding structure!
- Investment in Malaysia is permissible!
- Fund Manager service is optional!
- NO FOREIGN EXCHANGE CONTROLS
- NO WITHHOLDING TAX
- NO CAPITAL GAIN TAX / INHERITANCE TAX
Notification Requirements
Labuan Private Fund is not required to be registered with Labuan FSA, instead a private fund can carry on its affairs by giving notice in writing of its scope and nature of business to Labuan FSA. The notification shall be accompanied with an Information Memorandum (prospectus) and should be lodged through a Labuan Trust Company.
Key Features of A Labuan Private Fund
Labuan Private Fund can be set up using a variety of flexible structures such as a Labuan company, partnership, protected cell company (PCC), foundation or unit trust; from any recognised jurisdiction which is a member of the International Organisation of Securities Commission.
Investing in Malaysia Properties with a Labuan Private Fund
5 Simple Requirements to Set-Up A Labuan Private Fund
Legal Requirements
| Requirements | Description |
| General | |
| · Corporate vehicle permitted | Partnership, Company, Protected Cell Company, Foundation or a Unit Trust |
| · Local physical office required | No |
| Share capital or equivalent | |
| · Minimum subscription and investors | Less than 50 investors : MYR 250,000 (USD 63,000)
Any number of investors : MYR 500,000 (USD 125,000) |
| Directors | |
| · Minimum number | 2 |
| · Corporate directorship allowed | Yes |
| · Local director requirement | No |
| Shareholders | |
| · Minimum number | 2 |
| · Corporate shareholder allowed | Yes |
| · Local shareholder required | No |
| Service Providers Required | |
| · Custodian | Yes |
| · Fund Manager / Investment Manager | Optional |
| · Fund Administrator | Optional |
| · Auditors | Yes |
Regulatory and Operational Requirements for A Labuan Private Fund
- The issuer of the private fund must provide a copy of the Information Memorandum to each of the investors
- May appoint a fund manager, fund administrator or other service providers. If appointment is made, to submit an audited financial statement of its promoter and fund manager, where applicable, for three (3) preceding years along with the lodgment of Information Memorandum
- To ensure shareholders and every member of the Board of the private fund including any other relevant persons, are deemed fit and proper in accordance with the Guidelines on Fit and Proper Person issued by Labuan FSA
- Labuan private funds that have reached their maturity period shall notify Labuan FSA in writing within one month after its maturity
- Ensure fair and orderly winding down of the matured fund including having an auditor to ensure that all assets have been properly returned to investors
- Comply with the relevant laws and regulations in the jurisdictions where it intends to operate including obtaining the necessary approval
- Maintain adequate and proper accounting and other records in line with the Directive on Accounts and Record-Keeping Requirement for Labuan Entities issued by Labuan FSA that will sufficiently explain its transactions and financial position and indicate clearly its names on its letterhead, stationery and other documents
- Ensure compliance with the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 and Guidelines on Anti-Money Laundering and Counter Financing of Terrorism which is relevant to Labuan FSA
- Ensure proper policies and procedures are in place for a sound compliance framework which safeguards clients’ interests
Steps to Start A Labuan Mutual Fund
QX TRUST, your one-stop Trust Company in Labuan!
- Preliminary evaluation of the investment strategy and business considerations
- Feasibility study write-up based on client's profile
- Assistance with the selection of an appropriate entity for the fund
- Advice in relation to jurisdictional regulations
- Advice on the fund structure
- Drafting the fund prospectus / offering documentation and agreements
- Distribution of offering circulars to prospective investors
- Processing share issues and redemptions
- Maintaining the principal accounting books and liaison with auditors
- Disbursement of dividends, fees, directors’ salaries, overheads etc
- Safekeeping of Minutes of shareholders’ and board of directors’ meetings
- Addressing and submission of regulatory compliance