In order to perform business activities on the investment market in Labuan, Malaysia, the investors will require obtaining securities licenses, which are issued for specific financial activities. Labuan offers an attractive business environment, appealing to foreign investors due to a relaxed tax regime.
Investors who are interested in company formation in Labuan can start their business operations much faster than in the case of companies registered elsewhere in the country and our team of company incorporation representatives can offer their assistance for any part of the registration process, including the one referring at obtaining Labuan securities licenses.
Securities license law in Labuan, Malaysia
Securities licenses in Labuan, Malaysia, are issued in accordance with the regulations of the Labuan Financial Services and Securities Act 2010, which prescribes the types of business activities which can receive this license and our team of Labuan company formation agents can provide further information on the provisions of the law.
Part IV of the legislation states the following business operations that require securities license:
- Investment advisory: companies that make investment recommendations according to the financial situation and the objectives of the client;
- Administrative services: activities that involve making submissions on behalf of the clients to the authorities; can include the issuance of documents;
- Dealing in securities: the sale/purchase of securities, underwriting of securities, quoting prices, etc.;
- Others: any other business activities included in the Labuan Act that may be permitted.
The region of Labuan is also strongly represented by the Muslim society, which performs businesses following the rules of Sharia. In this sense, the Labuan authorities are also providing Islamic securities licenses, which comply with the Sharia principles. Moreover, it is also necessary to appoint a representative of the Sharia Advisory Board, as prescribed by the Part V of the Law.
How to obtain the securities licenses in Labuan
Investors who want to open a company in Labuan in the investment field should obtain a securities license, which is issued by the Labuan Financial Services Authority (FSA). In order to obtain a license from the Labuan FSA, the investor should make the proof that he or she has a recognized qualification in the respective field, which require a diploma and minimum 3 years of experience in fund industry or fund management activities. The application requirements are as follows:
- • Provide business particulars: information about the financial and human resources as well as the administrative facilities of the applicant;
- • Statements: the applicant shall provide a statement that include the place of business in Labuan; the name and address of the authorized representative;
- • Legal compliance: a separate statement for compliance with the Anti-Money Laundering and the Anti-Terrorism Financing Act;
- • Others: any other information about the company or additional documents as the FSA may consider necessary.
Companies that obtain this license are required to conform to other requirements as well. As previously stated, these requirements have to do with the applicant having relevant expertise and a minimum number of years’ experience in the capital market or fund management sector. Other requirements state that the company must have at least two directors, the key personnel should have relevant diplomas or certificates and the personal financial statement of the applicant should prove that he holds the financial resources to support the business.
As far as the operational requirements for the company holding the securities license are concerned, these are the following:
- – Have a minimum share capital: at least 150,000 RM or the equivalent in any foreign currency;
- – Insurance policy: maintain a professional indemnity insurance policy that has a coverage of no less than 1 million RM (or the equivalent in any foreign currency);
- – Operational office in Labuan: this needs to have a minimum of two employees;
- – Internal policies: the company needs to have policies for corporate governance, internal controls, risk management;
- – Appoint an auditor: the company needs to appoint an approved auditor and submit the annual account audit;
- – Notify any changes: the Labuan FSA is to be notified of any changes regarding the place of business, ownership or shareholding.
A license holder is required to pay an annual fee for this license. The amount is 5,000 RMN or 1,500 USD, payable each year to the FAS on or before 15 January.
Additional information for Labuan securities license holders
Our team of Labuan company formation agents recommends that interested investors plan the submission of the application for the securities license in due time as the process can be lengthy, depending on whether or not all of the documents are provided. The process can last approximately 45-60 days depending on whether or not the FSA makes subsequent inquiries.
Companies that obtain the Labuan securities license have the following advantages:
- – 3% tax: the tax is only 3% on net profits for these types of companies;
- – 20,000 RM: this is the alternative flat tax rate for companies that hold the license;
- – 0% tax: there is no stamp duty, no import duty, no sales tax, no capital gains tax, no inheritance tax;
- – 50% reduction: a 50% personal income tax exemption for expatriate qualified professionals;
- – 100% reduction: applicable to director’s fees received by expat directors.
One of our Labuan offshore company specialists can give you more details on the taxation principles for companies that deal in securities.
Investors who hold a securities license in Labuan have, as seen above, a number of important tax advantages. Not only this, but they can offer their investment services or administrative services to international clients. The Sharia compliance can be established later on, depending on whether or not the company will also provide these types of services. The company can target corporate or individual clients and it can establish its own quoting prices for dealing in securities.
Our team of Labuan offshore company formation experts can help investors incorporate a company that will later be used to obtain this license. Provided that the individual who incorporates has the fund management expertise and the certifications required, our team will assist in registering the company and setting up the office in Labuan. We can also assist investors when opening a bank account in Labuan and for the purpose of purchasing the professional indemnity insurance policy.
Businessmen interested in receiving a Labuan securities license can contact our team of Labuan company formation agents for legal assistance on this matter.
A Labuan offshore company must pay a registration fee regardless of the type of activity that it performs. If the fee for a securities company is of RM 5,000, for a company incorporated as per the rules of the Companies Act 1990, the fee is of RM 1,000 to RM 5,000.
The exact value of the fee is charged based on the capital of the company. RM 1,000 is charged for a capital of RM 0 to RM 50,000.