Registering a Labuan Private Fund

What is a Labuan Private Fund?

A Labuan Private Fund only conducts fundraising activities and offers securities within a closed or private group setting. Typically, investors in a Private Fund include high net worth individuals, sophisticated investors, and corporate entities. The securities within a Labuan Private Fund are offered, owned, and held by either:

Maximum 50 investors with each initial investment not less than MYR 250,000 or its equivalent in any foreign currency.

Unlimited number of investors with each initial investment not less than MYR 500,000 or its equivalent in any foreign currency.

Unlike Labuan Public Funds, Labuan Private Funds need not to be registered with Labuan FSA, as a notification of the fund on its scope and nature of business suffices. This notification must be accompanied with an Information Memorandum (prospectus) and can be lodged through a Labuan Trust Company, Labuan Bank or Labuan Fund Manager.

The ideal structure that we encourage our clients to opt for is an Investment Holding Company to hold the investments of the private fund, and to appoint a third-party fund manager to remain classified as a non-trading business activity under LBATA, thereby attracting a 0% tax rate.

What are the Uses of a Labuan Private Fund?

A private fund is often used as a hedging and investment vehicle by private investors. Labuan Private fund allows a collective pool of monies to be created for investment in various objectives such as:

Equities and shares

Forex and money market

Commodities

Real estates

Land acquisitions

Business projects

Business acquisitions

Development projects

Why Choose Labuan

Support for multi-structures, multi-currencies, and multi-risk investments, catering to investors with diverse risk profiles

Flexibility in structure (Labuan company, partnership or protected cell company)

Unlimited number of subscribers

Liberal foreign exchange controls

Permissible to invest in Malaysia domestic projects

Strategic location to tap into the Asia Pacific market

Shared time zone with major Asian cities for seamless interaction

Excellent infrastructure and regulations within the Labuan IBFC

OECD whitelist jurisdiction status

Recognised by prominent exchanges for entity listing (such as Hong Kong, Singapore, Malaysia, Australia, and Dubai Exchanges)

100% foreign ownership with a minimum requirement of 1 shareholder and 2 directors

Low corporate tax rate of 3%

Absence of withholding tax, stamp duty, GST, import duty, sales or service tax, capital gains tax, inheritance tax

Void of tax on dividends to shareholders

Void of tax on director fees for foreign directors

Ready to find out more?

Drop us an enquiry today and our consultant will be in touch with you shortly!

Regulatory & Operational Requirements of a Labuan Private Fund

Operational Requirements Required Information for the Information Memorandum

A copy of the Information Memorandum must be provided to each investor.
A fund manager, fund administrator or other service provider(s) may be appointed. If appointment is made, an audited financial statement of its promoter and fund manager for three (3) preceding years along with the lodgement of Information Memorandum have to be submitted.
All shareholders, Board members of the private fund and any other relevant individuals must be deemed fit and proper.
Upon reaching maturity, a Labuan Private Fund must notify Labuan FSA in writing within one month after its maturity.
Ensure a fair and orderly winding down process of the matured fund, including engaging an auditor to verify the proper return of assets to investors.
Comply with the relevant laws and regulations in the intended operating jurisdiction, including obtaining necessary approvals.
Maintain adequate and proper accounting and other records in line with the Directive on Accounts and Record-Keeping Requirement for Labuan Entities issued by Labuan FSA that sufficiently explains its transactions and financial position and clearly indicates the entity’s name on its letterhead, stationery, and other documents.
Ensure compliance with the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 and Guidelines on Anti-Money Laundering and Counter Financing of Terrorism issued by Labuan FSA.
Ensure proper policies and procedures are in place, coupled with a sound compliance framework to safeguards clients’ interests.

General Information such as the description and objective of the fund, profiles of the Board and investors, and income distribution policy of the fund.
Investment Strategy such as investment policies and objectives, the details of each investment and risk analysis.
Financial Forecast / Projections to provide investors with insight into the expected performance of the fund.
Redemption Policy outlining the procedures and conditions for investors seeking to redeem their investments.
Material Changes, which the Board has to provide a copy of amended Information Memorandum to each investor and LFSA within 30 days.

This ensures transparency and keeps all stakeholders informed of any significant developments affecting the fund.

FA Advisory offers one-stop application solutions for your Labuan Private Fund, encompassing:

Consultation on eligibility and procedural guidance tailored to your profile, fundraising objectives, plans and investment strategies.
Profiling, due diligence and guidance on documentation preparation.
Preparation of Business Plan, Financial Forecast and Operation Manuals.
Provision of Trustee and Custodian service.
Submission and supervision of the application process until approval.
Acting as your liaison and contact point with LFSA, arranging for interviews (if any).
Tracking the license approval and handling all queries from LFSA.
Advisory services on the appropriate company structure post-approval.
Assistance in setting up onshore and offshore bank accounts.
Assistance in establishing operational and marketing or co-located offices.
Staff provision and office space rental.
Internal audit and compliance advisory.

About FA Advisory

Comprising a team of seasoned professionals well-versed in Labuan’s business landscape, FA Advisory Limited extends a comprehensive suite of services covering corporate services, private wealth management, and licensing compliance administration, all tailored to meet the unique needs of our clients.

At FA Advisory Limited, our expertise lies in delivering Labuan insights that facilitate business expansion, simplifying intricate processes, and offering valuable information to guide you through various facets of your journey.

Choose FA Advisory as your trusted partner in navigating the dynamic business landscape of Asia. With our commitment, we are your gateway to success in Labuan and beyond.

Email: advisory@finarkasia.com | Phone number: +6010-931 6678