LABUAN ISLAMIC FINANCIAL SERVICES AND SECURITIES ACT 2010

Labuan Islamic Financial Services and Securities LAWS OF MALAYSIA REPRINT Act 705 LABUAN ISLAMIC FINANCIAL SERVICES AND SECURITIES ACT 2010 As at 15 October 2022 PUBLISHED BY THE COMMISSIONER OF LAW REVISION, MALAYSIA UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968 2022 1 2 Laws of Malaysia Act 705 LABUAN ISLAMIC FINANCIAL SERVICES AND SECURITIES ACT 2010 Date of Royal Assent … … … 31 January 2010 Date of publication in the Gazette … … 11 February 2010 Latest amendment made by Act A1655 which came into operation on … … … 1 January 2019 Labuan Islamic Financial Services and Securities LAWS OF MALAYSIA Act 705 LABUAN ISLAMIC FINANCIAL SERVICES AND SECURITIES ACT 2010 ARRANGEMENT OF SECTIONS Part I PRELIMINARY Section 1. Short title and commencement 2. Interpretation 3. Administration of the Act 4. Fit and proper person 5. Business in, from or through Labuan 6. Compliance with Syariah principles Part II SYARIAH SUPERVISORY COUNCIL 7. Establishment of the Syariah Supervisory Council 8. Functions of the Syariah Supervisory Council 9. Power to make rulings and give advice 10. Appointment of members to the Syariah Supervisory Council 11. Reference by court or arbitrator in making decision 3 4 Laws of Malaysia Act 705 Part III SECURITIES Chapter 1 Offer of securities Section 12. Interpretation 13. Offers or invitations which require the approval of the Authority 14. False or misleading statements 15. Advertisements 16. Registration of prospectus 17. Document containing offer of securities to be made via Labuan trust company or bank licensee or Islamic bank licensee and to be deemed prospectus 18. Expert’s consent to issue of prospectus containing statement by him 19. Civil liability for misstatement in prospectus 20. Criminal liability for misstatement in prospectus 21. Labuan trust company, bank licensee or Islamic bank licensee as agent in offer 22. Prohibition of allotment unless minimum subscription received 23. Application monies to be held in trust until issuance or allotment Chapter 2 Sukuk 24. Power to issue Sukuk 25. Trustee for Sukuk holders 26. Exemptions and indemnifications of trustee for Sukuk holders from liability 27. Duties of trustee for Sukuk holders 28. Obligations of directors of borrowing company 29. Obligation of guarantor company to furnish information 30. Monies to be immediately payable on certain events 31. Retention of over-subscriptions in Sukuk issues Labuan Islamic Financial Services and Securities 5 Part IV ISLAMIC MUTUAL FUNDS Chapter 1 Preliminary Section 32. Intepretation Chapter 2 Islamic private fund 33. Notification by Islamic private fund 34. Islamic private fund to lodge an information memorandum or such other offering document 35. Exclusion of liability for errors or omission in the information memorandum or such other offering document Chapter 3 Islamic public fund 36. Islamic public fund shall be registered 37. Application by Islamic public fund 38. Power to grant or refuse registration of Islamic public fund 39. Registration procedure 40. Prospectus relating to Islamic public fund 41. Investors’ rights 42. Limitation 43. Certificate of compliance 44. Foreign Islamic public fund may be managed or administered in Labuan Chapter 4 Fund managers and fund administrators 45. Fund manager or fund administrator of an Islamic public fund 6 Laws of Malaysia Act 705 Section 46. Duties of a fund manager and fund administrator of an Islamic public fund 47. Duties of a fund manager and fund administrator under applicable law 48. Specific duties of a fund manager of an Islamic public fund 49. Duty to segregate client’s assets Chapter 5 Trustees or custodians 50. Eligibility of a trustee or custodian of an Islamic public fund 51. Duties of a trustee or custodian and director under applicable law 52. Duty of a fund manager, custodian or trustee to be independent of each other Chapter 6 Registers and accounting 53. Registers 54. Accounts and audit Part V LICENSING OF INTERMEDIARIES Chapter 1 Preliminary 55. Interpretation Chapter 2 Islamic securities licensee 56. Islamic securities licensee 57. Application for licence 58. Power to grant or refuse application for licence Labuan Islamic Financial Services and Securities 7 Section 59. Form of licence Part VI LABUAN ISLAMIC BANKING Chapter 1 60. Preliminary Interpretation Chapter 2 Licensing of Labuan Islamic banking business 61. Labuan Islamic banking business to be carried on only under licence 62. Labuan Islamic investment banking business to be carried on only under licence 63. Application for licence to carry on Labuan Islamic banking business 64. Application for licence to carry on Labuan Islamic investment banking business 65. Application for licence to carry on Labuan Islamic financial business 66. Additional information 67. Grant of licence by the Authority 68. Requirement to use, and restriction on use of, the words “Labuan Islamic bank”, etc. 69. Maintenance of capital adequacy ratio 70. Amendment or alteration of constituent documents of Islamic bank licensee 71. Authority to publish list of Labuan Islamic bank licensee Chapter 3 Duties of Islamic bank licensees 72. Offices and subsidiaries 73. Prohibition of certain accounts 8 Laws of Malaysia Act 705 Section 74. Financial statements, statistics and information to be submitted to the Authority 75. Payment from a deceased person’s account Part VII LABUAN TAKAFUL BUSINESS AND LABUAN TAKAFUL RELATED ACTIVITIES Chapter 1 76. Interpretation Preliminary Chapter 2 Licensing 77. Licensing of Labuan takaful business and Labuan takaful related activities 78. Application for takaful licence to carry on Labuan takaful business 79. Application for takaful licence to carry on Labuan takaful related activities 80. Grant of takaful licence 81. Publication of list of all Labuan takaful licensees 82. Continuing licensing requirements Chapter 3 Financial requirements and duties of and restrictions on takaful licensees 83. Appointment of actuary 84. Margin of solvency 85. Segregation of takaful fund 86. Separate accounts to be kept by Labuan takaful operator 87. Submission of financial statements 88. Subsidiaries and offices of takaful licensees Labuan Islamic Financial Services and Securities 9 Section 89. Restriction on business of takaful licensees by Labuan takaful operator 90. Restrictions on and duties of Labuan takaful manager, Labuan takaful underwriting manager and Labuan takaful broker 91. List of Labuan takaful operators to be supplied by Labuan takaful manager and Labuan takaful underwriting manager 92. Conduct of business Chapter 4 Payment of policy monies under a family takaful policy and personal accident takaful policy 93. Application of this Chapter 94. Power to make nomination 95. Revocation of nomination 96. Payment of policy monies 97. Trustee of policy monies 98. Nominee other than a nominee under section 97 99. Assigned or pledged policy monies 100. Payment of policy monies where there is no nomination 101. Payment to person incompetent to contract 102. Distribution of policy monies in due course of administration 103. This Chapter to prevail over policy and any other written law Chapter 5 Winding-up 104. Winding-up of Labuan takaful operator Part VIII LABUAN ISLAMIC TRUSTS 105. Establishment of Labuan Islamic trusts 106. Assets of Labuan Islamic trusts 10 Laws of Malaysia Act 705 Part IX LABUAN ISLAMIC FOUNDATION Section 107. Establishment of Labuan Islamic foundation 108. Object and purpose 109. Charter 110. Assets Part X LABUAN ISLAMIC LIMITED PARTNERSHIPS AND LABUAN ISLAMIC LIMITED LIABILITY PARTNERSHIPS 111. Establishment of Labuan Islamic limited partnership and Labuan Islamic limited liability partnership 112. Object and purpose PART XI ISLAMIC SELF-REGULATORY ORGANIZATIONS 113. Declaration or recognition of an Islamic self-regulatory organization 114. Rules of an Islamic self-regulatory organization 115. Restriction on decision-making 116. Obligations of and in relation to officers of an Islamic self-regulatory organization 117. Powers to direct an Islamic self-regulatory organization 118. Termination of arrangements and revocation of declaration or recognition 119. Amendments to the constitution of an Islamic self-regulatory organization 120. Protection for an Islamic self-regulatory organization 121. Financial statements of an Islamic self-regulatory organization 122. Powers of the Authority with respect to Islamic self-regulatory organization Labuan Islamic Financial Services and Securities 11 Part XII GENERAL Section 123. Appeals 124. Revocation of consent, licence or registration 125. Revocation procedure 126. Surrender of licence 127. Consequences of revocation or surrender of licence 128. Transfer of business 129. Additional licensing requirements of Islamic bank licensees and takaful licensees 130. Establishment of internal Syariah advisory board for Islamic securities licensees and fund manager 131. Syariah Adviser for Labuan Islamic trusts, Labuan Islamic foundation, Labuan Islamic limited partnership or Labuan Islamic limited liability partnership 132. Internal Syariah compliance review 133. External Syariah compliance review 134. Internal audit 135. External auditor 136. Payment systems 137. Accounts and records 138. Examination and inspection of books and documents of licensed entities 139. Secrecy 140. Secrecy in relation to the Syariah Supervisory Council 141. Translation 142. Application of Exchange Control Act 1953 143. Application of Capital Markets and Services Act 2007 144. Application of Labuan Companies Act 1990 and Companies Act 1965 145. Application of Labuan Financial Services Authority Act 1996 146. Non-application of certain laws 147. Protection against suit and legal proceedings 12 Laws of Malaysia Section 148. General penalty 149. Offence by body corporate 150. Annual and licence fees 151. Procedure where none laid down 152. Misrepresentation 153. Enforcement 154. Power to compound 155. Service of documents 156. Power of the Minister to make regulations 157. Power of the Minister to issue directions 158. Power of the Minister to amend Schedules 159. Power of the Minister to grant exemptions 160. Publication of notification, Gazette 161. Savings and transitional First Schedule Second Schedule Third Schedule Act 705 Labuan Islamic Financial Services and Securities 13 LAWS OF MALAYSIA Act 705 LABUAN ISLAMIC FINANCIAL SERVICES AND SECURITIES ACT 2010 An Act to provide for the licensing and regulation of Islamic financial services and securities in Labuan and for other matters related thereto. [11 February 2010, P.U. (B) 59/2010] 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 Islamic Financial Services and Securities Act 2010. (2) This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette and the Minister may appoint different dates for the coming into operation of different parts or different provisions of this Act. Interpretation 2. (1) In this Act, unless the context otherwise requires— “actuary” means a person being— (a) a fellow of any of the professional associations listed in the Second Schedule or other associations as may be approved by the Authority; or 14 Laws of Malaysia Act 705 (b) a person recognized by the Authority as an actuary for the purposes of this Part, who appears on the list of actuaries maintained by the Authority; “approved auditor” means an approved auditor under section 10 of the Labuan Companies Act 1990 [Act 441]; “Authority” means the La