LABUAN FOUNDATIONS ACT 2010

Labuan Foundations 1 LAWS OF MALAYSIA REPRINT Act 706 LABUAN FOUNDATIONS ACT 2010 As at 1 July 2023 PUBLISHED BY THE COMMISSIONER OF LAW REVISION, MALAYSIA UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968 2023 2 Act 706 Laws of Malaysia LABUAN FOUNDATIONS ACT 2010 Date of Royal Assent … … … 31 January 2010 Date of publication in the Gazette … … 11 February 2010 … … Labuan Foundations LAWS OF MALAYSIA Act 706 LABUAN FOUNDATIONS ACT 2010 ARRANGEMENT OF SECTIONS Part I PRELIMINARY Section 1. Short title and commencement 2. Interpretation Part II ADMINISTRATION OF THE ACT 3. Administration of the Act Part III ESTABLISHMENT OF LABUAN FOUNDATION 4. Establishment of Labuan foundation 5. Founder of Labuan foundation 6. Beneficiaries under Labuan foundation 7. Purpose and object of Labuan foundation 8. Charter of Labuan foundation 9. Amendment of charter 10. Articles of Labuan foundation 11. Property of Labuan foundation 12. Powers and obligations of founder 3 4 Laws of Malaysia Act 706 Part IV REGISTRATION OF LABUAN FOUNDATION Section 13. Name of Labuan foundation 14. Registration 15. Certificate of registration 16. Register of Labuan foundation 17. Change of particulars 18. Change of name 19. Rights and obligations of Labuan foundation not affected by change of name 20. Striking off 21. Effect of striking off 22. Restoration to register 23. Redomicilation in Labuan 24. Redomicilation in another country Part V COUNCIL, OFFICERS AND SECRETARY Council 25. Appointment of council 26. Council meeting 27. Disqualification of council member 28. Cessation of council member 29. Appointment of supervisory person 30. Appointment of council member by Court 31. Powers of council 32. Rights of council 33. Duties of council 34. References to council apply to council members acting jointly and severally Labuan Foundations 5 Officers Section 35. Appointment of officers 36. Meetings of officers 37. Disqualification of officer 38. Duties of officers 39. Cessation of officers 40. Remuneration of officers Secretary 41. Secretary 42. Cessation of secretary 43. Documents to be filed through secretary Registered office 44. Registered office 45. Documents to be kept at registered office 46. Form of records of Labuan foundation 47. Translation of document and instrument 48. Inspection and production of documents kept by Labuan foundation 49. Inspection and production of documents kept by Authority Part VI CAPACITY OF LABUAN FOUNDATION 50. Capacity and powers 51. Ratification of act done beyond capacity 52. Power of officers to bind the Labuan foundation 53. Execution of contracts, documents by Labuan foundation 54. Disclosure of interest 55. Liability of council member, supervisory person, officer and secretary 6 Laws of Malaysia Act 706 Section 56. Court may grant relief 57. Money or other property from illegal activities 58. Fraudulent disposition 59. Accounts to be kept 60. Audit of Labuan foundation 61. Unenforceability of foreign claim or judgment Part VII BENEFICIARIES 62. Rights of beneficiary to information pertaining to his interest 63. Right of beneficiary to confidentiality 64. Court may order information to be made available to beneficiary 65. Distribution of property to beneficiary 66. Delegation of power to authorize distribution to beneficiary by officer Part VIII DISSOLUTION 67. Dissolution 68. Power of Court to order dissolution 69. Distribution of property Part IX GENERAL PROVISIONS 70. Fees 71. Secrecy 72. Right to information 73. Confidentiality 74. Prosecution 75. Offences relating to the documents of Labuan foundation Labuan Foundations Section 76. Offences by body corporate 77. Power to compound 78. Power to impose administrative penalties 79. General power to prescribe and specify 80. Power of Minister to make regulations 81. Power of Minister to amend Schedule 82. Power of Minister to exempt 83. Procedure where none laid down 84. Application of the Labuan Financial Services Authority Act 1996 First Schedule Second Schedule Third Schedule Fourth Schedule Fifth Schedule 7 8 Laws of Malaysia Act 706 9 Labuan Foundations LAWS OF MALAYSIA Act 706 LABUAN FOUNDATIONS ACT 2010 An Act to provide for the establishment, regulation and dissolution of foundations in Labuan and for matters relating to it. [11 February 2010] ENACTED by the Parliament of Malaysia as follows: Part I PRELIMINARY Short title and commencement 1. (1) This Act may be cited as the Labuan Foundations Act 2010. (2) This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette. Interpretation 2. In this Act, unless the context otherwise requires— “administrative penalty” means the penalty imposed in accordance with section 78; “approved auditor” means a person approved by the Authority as an approved auditor under section 10 of the Labuan Companies Act 1990 [Act 441]; 10 Laws of Malaysia Act 706 “articles” means the articles of a Labuan foundation provided for in section 10; “Authority” means the Labuan Financial Services Authority established under section 3 of the Labuan Financial Services Authority Act 1996 [Act 545]; “authorized officer” means any officer duly authorized by the Authority under subsection 3(2); “beneficiary” means a person designated as a beneficiary under the provisions of the constituent document of a Labuan foundation; “certificate of registration” means the certificate of registration issued under section 15 upon the registration of a Labuan foundation; “charter” means the charter of a Labuan foundation provided for in section 8; “constituent document” means the charter and the articles, of a Labuan foundation; “corporation” means any body corporate, formed or incorporated, or existing within or without Malaysia and includes any foreign Labuan company but does not include— (a) any corporation sole; (b) any trade union registered under any written law as a trade union; and (c) any society registered under any written law relating to co-operative societies; “council” and ”council member” mean the council of a Labuan foundation appointed in accordance with section 25 and council member shall be construed accordingly; “Court” means the High Court or a judge of the High Court; “founder” means the person who subscribes his name to the charter establishing a Labuan foundation acting either for himself or on behalf of another person and who, by transfer of title, endows that Labuan foundation with its initial assets; Labuan Foundations 11 “initial assets” means the property endowed by the founder or founders, as the case may be, at the time of establishment of a Labuan foundation and vested in and being the property of that Labuan foundation; “Labuan” means the Federal Territory of Labuan; “Labuan company” has the meaning assigned to it in the Labuan Companies Act 1990; “Malaysia” means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the 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 non living; “Malaysian property” means any property which is situated in Malaysia; “Minister” means the Minister for the time being charged with the responsibility for finance; “officer” means the officer of a Labuan foundation appointed in accordance with section 35; “person” includes a corporation, a partnership, a body of persons, corporate or unincorporated, and a corporation sole; “property” includes— (a) assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, however acquired; and (b) legal documents or instruments in any form, including electronic or digital, evidencing title to or interest in, such assets as described in paragraph (a), including bank cheques, money orders, shares, securities, bonds, bank drafts and letters of credit; 12 Laws of Malaysia Act 706 “register” means the register of Labuan foundations registered under this Act maintained under section 16; “remaining beneficiary” means a person or persons who, according to the constituent document of a Labuan foundation, shall be entitled to receive any remaining property after the dissolution of the Labuan foundation; “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 a Labuan company or a foreign Labuan company incorporated or registered under the Labuan Companies Act 1990, a Labuan foundation established under this Act, 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 [Act 17]; “secretary” means a Labuan Trust company appointed as secretary in accordance with section 41; “supervisory person” means any person or body of persons having supervisory powers over the Labuan foundation and is appointed under the charter of the Labuan foundation; “to endow” means to pass, or covenant to pass, the title in property, absolutely so as to transfer the title to the property effectively, with or without consideration, to a Labuan foundation so that the property is the property of that Labuan foundation. *NOTE—The Exchange Control Act 1953 [Act 17] has since been repealed by the Financial Services Act 2013 [Act 758] which comes into operation on 30 June 2013—see section 271 Act 758. Labuan Foundations 13 Part II ADMINISTRATION OF THE ACT Administration of the Act 3. (1) The Authority shall be responsible for the administration of this Act subject to the general directions and control of the Minister. (2) The Authority may authorize any of its members or officers to perform any of its functions, exercise any of its powers or discharge any of its duties under this Act. (3) Subject to such limitations, if any, as may be prescribed by the Authority, an authorized officer shall exercise all the powers, discharge all the duties and perform all the functions of the Authority and every power so exercised, duty so discharged and function so performed shall be deemed to have been duly exercised, discharged and performed for the purposes of this Act. Part III ESTABLISHMENT OF LABUAN FOUNDATION Establishment of Labuan foundation 4. (1) Any person may, by subscribing his name to a charter of a Labuan foundation as the founder and complying with the requirements of this Act, establish a Labuan foundation. (2) The establishment of a Labuan foundation shall not be completed until a certificate of registration in respect of such Labuan foundation has been issued under Part IV. Founder of Labuan foundation 5. (1) The founder of a Labuan foundation may be a resident or non-resident. 14 Laws of Malaysia Act 706 (2) The property of the Labuan foundation shall not include any Malaysian property unless the prior approval of the Authority is obtained or the Labuan foundation is a foundation for charitable purposes. Beneficiaries under Labuan foundation 6. (1) The beneficiaries of a Labuan foundation may be a resident or a non-resident. (2) Where the property of a Labuan foundation include Malaysian property, the Income Tax Act 1967 [Act 53] shall be applicable to any income derived therefrom. (3) The income derived from any property which is not Malaysian property is subject to the Labuan Business Activity Tax Act 1990 [Act 445]. Purpose an