The fund manager is the one responsible for the implementation of the investment strategy for the fund, for managing the portfolio and the trading activities. In Labuan, a distinctive type of fund managers are those who specialize in Islamic fund management, who are required to comply with Sharia law. Investors who are interested in Labuan company formation for the purpose of establishing a mutual fund should be well informed on the requirements for these funds, including their managers.
The fund manager who provides certain investment services in Labuan is required to obtain a license, accordingt o the guidelines issued by the Labuan Financial Services Authority (FSA). Businessmen who are interested in opening a company in Malaysia providing investment services have to follow a set of specific steps in this sense. At the same time, the fund managers in Labuan also have to comply with a set of requirements stating their expertise in the field and our team of consultants in company formation in Labuan can offer an in-depth presentation on these aspects.
What is a fund manager in Labuan?
According to the applicable legislation in Labuan, a fund manager represents a person who provides investment services, which can be related to investment advice or administrative aspects for investment purposes. They can also provide their services for securities matters. These individuals are required to comply with the requirements set forth by the Financial Services Authority in Labuan. The two main legislative documents with wish a fund manager complies with are the Labuan Financial Services and Securities Act and the Labuan Islamic Financial Services and Securities Act, their respective sections, as required according to the type of fund managed by the individual in question.
One of our agents who specialize in Labuan trust company and Labuan fund creation can provide more details on the governing laws. It is recommended to seek professional advice as any individual who fails to comply with the Guidelines is punishable under two sections in the Labuan Financial Services Authority Act 1996.
Who is eligible to become a fund manager?
Entrepreneurs who wish to open a company in Labuan, Malaysia, in the investment field, ought to know that somebody can obtain a fund manager license in the following conditions:
• the person must have a degree or a qualification in the field of investment;
• the person is a member of the International Organisation of Securities Commission;
• if the above mentioned criteria are not met, the individual can still obtain a fund manager license, as long as he or she can prove a certain experience in the field.
According to the provisions of the Guidelines, an individual needs to have at least a minimum qualification of three years’ relevant experience in the capital market or direct experience with fund management activities.
More details on this subject are available in the presentation below:
What activities can a fund manager undertake in Labuan?
The following list includes the activities a licensed fund manager in Labuan can undertake. Investors who wish to open a company in Labuan and apply for a fund manager license afterward can reach out to our agents for complete information about these qualifications.
- management activities: related to managing the portfolio for the clients as well as their discretionary accounts.
- investment advice: submitting investment recommendations based on analysis and offering consultancy to clients.
- administrative services: making the necessary submission to the Labuan Financial Services Authority and issuing documents.
- dealing in securities: manage the sale and purchase of securities, those that are and that are not listed on a stock exchange or market.
The fund manager in Labuan is required to perform these activities with careful consideration for the client as well as by ensuring the use of an efficient risk management plan. He is the one responsible for setting out the extent of the financial requirements so that the business remains operational in relation to the fund management strategies. A Labuan offshore company that is incorporated for the purpose of fund management, most often mutual fund management, can provide these services by bringing experienced fund managers into the team.
What are the operational requirements the fund manager must observe?
The fund manager is also required to observe a set of operational requirements:
- • capital: maintain the paid-up capital at a value of at least 300,000 RM or its equivalent in another foreign currency.
- • insurance policy: the professional indemnity insurance policy should have a coverage of no less than 1 million RM or the equivalent in another foreign currency.
- • compliance: make sure that the shareholders, the directors, principal officer, and representative meet the requirements of the Labuan Financial Services Authority for a fit and proper individual.
- • internal policies: establishing and maintaining adequate internal policies and procedures for the fund management operations, internal controls, and risk management.
The fund manager is required to obtain prior approvals from the Authority for the purpose of changing the place of business in Labuan or outside Labuan, for management and shareholding changes as well as for the appointment of directors and shareholders.
Receive the fund manager license
Persons who want to receive a fund manager license in Labuan should apply at the Labuan FSA, by submitting an application form (Form LSCM), alongside with other relevant documents required when completing the Form LSCM.
The investor should also provide a business plan, detailing the activities carried out under the investment fund or investment company. At the same time, the applicant should provide relevant details on the financial resources and comply with the Guidelines on Fit and Proper Person Requirements.
Labuan fund managers are required to perform their activities with skill, due diligence, and care. They must act in the client’s interest as well as to conduct business activities with integrity. They must also comply with the annual license fee requirements (payable no later than 15th January each year).
Our Labuan company formation agents highlight the fact that, for the purpose of obtaining a Labuan fund manager license, the Authority will evaluate both the applicant (his character, professionalism, and integrity) and the business plan.
Labuan is a popular location for fund management, as demonstrated by the following statistics:
- – the total private fund size in Q1 2018 was 12,385 million US$;
- – the private fund size in Q2 2018 was 12,785 million US$;
- – the total Islamic private fund size in 2018 was 870 (both Q1 and Q2);
- – the total number of approved private funds was 56 in 2018.
The statistics are from October 2018, issued by the Labuan Financial Services Authority.
Businessmen interested in finding out more information on how to obtain a Labuan fund manager license are invited to contact our team of company formation specialists in Malaysia, who can assist foreign investors in this process.