Opening a joint stock company in Labuan must follow the registration steps in accordance with the Labuan Companies Act 1990 (LCA 1990). Both Malaysian residents and non-residents are permitted to set up Labuan companies. Our team of company formation specialists in Labuan can guide you through the legal and regulatory requirements for setting up a Labuan JSC.
Requirements to set up a joint stock company in Labuan
To set up a joint stock company in Labuan, the company must have a minimum of two shareholders and two directors, and an office in this region.
The ownership and voting rights are distributed among joint owners. Specifically, if two or more persons hold shares jointly, they are considered members of the company and have the right to attend and speak at meetings of members. If only one joint owner is present at the meeting, he/she is authorized to vote on behalf of all joint owners.
Labuan joint stock companies must appoint at least one secretary, who must be named by a Labuan Trust Company, and have a registered office, which must also be the main office of a Labuan Trust Company. Additionally, it is required to have a specific number of employees.
When naming a JSC, the name cannot include any words or abbreviations that suggest that it is a joint stock company.
For more details about company incorporation in Labuan, seek professional advice from our lawyers and consultants who are familiar with the legal and regulatory requirements.
The minimum capital to open a joint stock company in Labuan
There is no specific minimum capital requirement for opening a joint stock company in Labuan. However, Labuan companies are required to have an appropriate amount of share capital to support their business operations and maintain adequate financial resources.
Labuan joint stock companies can issue shares in any foreign currency except for Malaysian Ringgit, and the minimum share issue is one share in any denomination of foreign currency. The shares issued by a Labuan company have no par or nominal value, meaning their value is determined by the market price at which they are traded.
Taxes for joint stock companies in Labuan
Before opening a joint stock company in Labuan, you must know that companies are subject to a tax rate of 3% on their audited net profits.
As part of their tax filing requirements, Labuan joint stock companies must submit audited accounts, but under the LCA 1990, their records are not accessible to the public.
A tax rebate is granted to Labuan companies for each year of assessment, provided that they have paid any business zakat (Islamic religious tax), during the basis period for that year of assessment, to a Labuan Islamic religious authority and can provide a receipt as evidence.
However, if the total amount of the rebate exceeds the tax charged for that year of assessment, the excess amount is not refunded but may be used as a credit to set off the Labuan company’s tax liability for that year or any subsequent year. Details about taxes regarding company formation in Labuan can be provided by our team of specialists.
Many multinational corporations and entrepreneurs find Labuan to be an appealing location, as demonstrated by the following statistics and data:
- There were 5,151 operating companies in Labuan in 2021, according to Labuan International Business and Finance Centre;
- Out of the total number, 1,869 companies are established as non-trading entities for the sole purpose of holding investments;
- The total market capitalization increased by 11% to USD 26,3 billion in 2021;
- The oil and gas industry experienced a profit increase of USD 3,5 billion in 2021.
Overall, opening a joint stock company in Labuan can be a good idea due to its favorable tax regime, ease of doing business, and access to global markets. Additionally, you can also open Labuan offshore companies, providing greater flexibility for international business transactions.
If you are interested in setting up any type of company in Labuan, we encourage you to contact our law firm for further advice and guidance.