LABUAN OFFSHORES TRUSTS ACT 1996

LAWS OF MALAYSIA ONLINE VERSION OF UPDATED TEXT OF REPRINT Act 554 LABUAN TRUSTS ACT 1996 As at 1 December 2011 2 LABUAN TRUSTS ACT 1996 … … 13 September 1996 Date of Publication in the Gazzett … … 26 September 1996 Latest amendment made by Act A1368 which came into operation on … … … 11 February 2010 Date of Royal Assent … … … PREVIOUS REPRINTS First Reprint ... ... ... ... ... 2002 Second Reprint ... ... ... ... ... 2006 3 LAWS OF MALAYSIA Act 554 LABUAN TRUSTS ACT 1996 ARRANGEMENT OF SECTIONS PART I PRELIMINARY Section 1. Short title 2. Interpretation 3. Existence of a trust 4. (Deleted) 5. (Deleted) 6. Proper law of a trust and power to change proper law PART IA ADMINISTRATION OF THE ACT 6A. Administration of the Act 6B. Authorized officer PART II CREATION AND RECOGNITION OF LABUAN TRUSTS 7. Existence of Labuan trust 8. Creation of Labuan trust 8A. Secrecy 8B. Retention of certain rights by settlor 9. Validity of Labuan trust 10. Unenforceability of foreign claim or judgment 4 Laws of Malaysia Section 11. Fraudulent Labuan trust or disposition 11A. Purpose trusts 11B. Charitable trusts 11C. Enforcers 11D. Purpose trust not rendered void merely by uncertainty 11E. Spendthrift of protective trust 12. Registration of Labuan trust 13. Registration of trust instrument 14. Name and registered office of Labuan trust 15. Register and restriction on disclosure 16. Duration of Labuan trust 17. Variation and revocation of Labuan trust 18. Failure or lapse of interest 19. Termination of Labuan trust 20. Redomiciliation of foreign trust in Labuan 21. Migration of Labuan trust from Labuan PART III BENEFICIARIES OF LABUAN TRUSTS 22. Beneficiaries 23. Disclaimer 24. Interest of beneficiary and dealings thereof 25. Class interest PART IV TRUSTEES OF LABUAN TRUSTS 26. Appointment of trustees 27. Acceptance of appointment as trustee 28. Resignation of trustees 29. Vacancy in a trust 30. Duties of trustees ACT 554 Labuan Trusts Section 31. Duty of co-trustees 32. Impartiality of trustees 33. Powers of trustees 33A. Trustee’s power of investment 33B. Advice in relation to investment 34. Letter or memorandum of wishes 35. Appointment of protector 36. Delegation of powers by trustee 36A. Delegation of powers in relation to property management funtions 36B. Review of agents 37. Power of attorney 38. 39. Accumulation, advancement or appropriation of trust property 40. Remuneration and expenses 41. Right to information 42. Liability for breach of trust 42A. Prevention of breach of trust 42B. Remedies for breach of trust 43. Trustee acting in respect of more than one trust 44. Dealings with third parties 45. Constructive trustee 46. Indemnity of retiring trustee Appointment or assignment of trust property PART IVA LABUAN SPECIAL TRUST 46A. 46B. Application of this Part 46C. Primary purpose of this Part 46D. Designated shares 46E. Trustee’s duties in relation to designated shares 46F. Restriction on trustee’s powers Interpretation 5 6 Laws of Malaysia ACT 554 Section 46G. Provisions relating to directors 46H. Intervention by trustee in management in prescribed circumstances 46I. Power to dispose designated shares 46J. Enforcement 46K. Power of Court to order disposal 46L. Beneficiaries not entitled 46M. Disqualification of trustee as a director 46N. Ascertaining wishes of settlor 46O. Limitation of trustee’s duties 46P. Restrictions on Labuan trust to apply PART V MISCELLANEOUS 47. Variation of terms of trust on behalf of minors, etc. 48. Approval of particular transactions 49. General powers of the Court 50. Payment of costs 51. Protection of persons dealing with trustees 52. Limitation of action 53. Money or other property from illegal activities 54. General offence and penalty 55. Power to prosecute 56. Power to compound 57. Power of the Minister to make regulations 58. Power of the Minister to grant exemptions 59. Prohibition on registration or carrying on of business 60. Procedure where none laid down 61. Saving in respect of trusts existing before the commencement of this Act 62. Non-application of certain laws 63. Application of the Labuan Financial Services Authority Act 1996 7 LAWS OF MALAYSIA Act 554 LABUAN TRUSTS ACT 1996 An Act to provide for the creation and recognition of Labuan trusts; and for matters connected therewith or incidental thereto. [31 October 1996, P.U. (B) 472/1996] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: PART I PRELIMINARY Short title 1. This Act may be cited as the Labuan Trusts Act 1996. Interpretation 2. (1) In this Act, unless the context otherwise requires— ―Authority‖ means the Labuan Financial Services Authority established under section 3 of the Labuan Financial Services Authority Act 1996 [Act 545]; ―authorized officer‖ means an officer duly authorized by the Authority under section 6B; ―beneficiary‖ means a person entitled to benefit under a trust or in whose favour a discretion to distribute property held in trust may be exercised; ―breach of trust‖ means— 8 Laws of Malaysia ACT 554 (a) any act by a trustee which is in contravention of the duties imposed; (b) any act or neglect by a trustee which is not authorized or excused; or (c) any neglect or omission on the part of the trustee to fulfill the duties imposed upon him, by this Act, the proper law of the trust or the terms of the trust; ―charitable trust‖ means a trust referred to in section 11B; ―corporation‖ means a body corporate formed or incorporated or existing within Malaysia or outside Malaysia and includes a foreign Labuan company but does not include— (a) a corporation sole; (b) a trade union registered under written law as a trade union; or (c) a society registered under any written law relating to cooperative societies; ―Court‖ means the High Court or a judge thereof; ―enforcer‖ means a person referred to in section 11 C; ―Labuan‖ means the Federal Territory of Labuan; ―Labuan company‖ has the meaning assigned to it in the Labuan Companies Act 1990 [Act 441]; ―Labuan trust‖ has the meaning assigned to it under subsection 8(1); ―Labuan trust company‖ means a corporation registered as a Labuan trust company under Part V of the Labuan Financial Services and Securities Act 2010 [Act 704]; ―Malaysia‖ means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the Labuan Trusts 9 territorial waters, and includes any area extending beyond the limits of the territorial waters of Malaysia, and the sea-bed and subsoil of any such area, which has been or may hereafter be designated under the laws of Malaysia and in accordance with international law as an area over which Malaysia has sovereign rights for the purposes of exploring and exploiting the natural resources, whether living or nonliving; ―Minister‖ means the Minister for the time being charged with the responsibility for finance; ―minor‖ means a person who has not attained the age of majority under the proper law of a trust or, where no law has been chosen, the law of his domicile; ―person‖ includes a corporation, a partnership, a body of persons, corporate or unincorporated, and a corporation sole; ―prescribed‖, where no mode is mentioned, means prescribed from time to time by order published in the Gazette, and a power to prescribe includes the power to make different provisions in the order for different persons or different classes, categories or descriptions of persons; ―proper law‖ means— (a) the law chosen by the settlor to be applicable to a trust, the choice being expressed or implied in the terms of the trust; or (b) where no law is chosen, the law with which a trust is most closely connected at the time of its creation; ―property‖ includes— (a) property of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, however acquired; or (b) legal documents or instruments in any form, including electronic or digital, evidencing title to or interest in, 10 Laws of Malaysia ACT 554 such property, including bank cheques, money orders, shares, securities, bonds, bank drafts and letters of credit; ―protector‖ means a person appointed in accordance with section 35; ―purpose trust‖ means a trust referred to in section 11 A, and includes a charitable trust; ―qualified person‖ means a person who is not a resident of Malaysia; ―register‖ includes any kind of record; ―registered Labuan trust‖ means a Labuan trust registered under subsection 12(4); ―resident‖ means any person— (a) who is a citizen or permanent resident of Malaysia; or (b) who has established a place of business and is operating in Malaysia, other than— (i) a Labuan company or a foreign Labuan company incorporated or registered under the Labuan Companies Act 1990; (ii) a Labuan foundation established under the Labuan Foundations Act 2010 [Act 706]; and (iii) a partnership registered under the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010 [Act 707], and includes a person who is declared to be a resident pursuant to section 43 of the Exchange Control Act 1953; ―ringgit‖ means a ringgit in the currency of Malaysia; ―settlor‖ means a person who makes a trust and includes a person who provides trust property or makes a testamentary disposition on Labuan Trusts 11 trust or to a trust, but does not include a person who contributes to a unit trust; ―specified‖, where no mode is mentioned in this Act, means specified from time to time in writing, and a power to specify includes the power to specify differently for different persons or different classes, categories or description of persons; ―terms of the trust‖ means the written or oral terms of a trust or any other terms applicable under its proper law; ―trust‖ includes the trust property and the rights, powers, duties, interests, relationships and obligations under a trust; ―trust instrument‖ means an instrument by which a trust is created and includes a unilateral declaration of trust and any instrument varying the terms of the trust; ―trust property‖ means the property for the time being held on trust; ―trustee‖ means a person appointed to act as a trustee of a trust in accordance with the provisions of this Act; ―unilateral declaration of trust‖ has the meaning assigned to it by section 8; ―unit trust‖ means any trust established for the purpose, or having the effect, of providing facilities for the participation by persons as beneficiaries under the trust in any profits or income arising from the acquisition, holding, management or disposal of any property. (2) (Deleted by Act A1368). (3) Any reference in this Act to ―this Act‖ shall, unless otherwise expressly stated, be deemed to include a reference to any regulation, rule, order, notification or other subsidiary legislation made under this Act. (4) Words and expressions used in this Act with reference to any other law shall, so far as necessary to give effect to this Act and consistently with the provisions thereof, have the same meaning as they have in the law with reference to which they are used in this Act. 12 Laws of Malaysia ACT 554 Existence of a trust 3. A trust exists where a person holds or has vested in him or is deemed to hold or have vested in him property of which he is not the owner in his own right and is under an obligation as a trustee to deal with that property— (a) for the benefit of any beneficiary, whether or not ascertained or in existence; (b) for any purpose which is not for the benefit of the trustee; or (c) for both such benefit and purpose mentioned in paragraphs (a) and (b). 4. (Deleted by Act A1368). 5. (Delet