A Guide to Labuan Fund Manager

Labuan companies incorporated for fund management purposes, licensed under either the Labuan Financial Services and Securities Act 2022 or the Labuan Islamic Financial Services and Securities Act 2022, can engage in the following activities:

1. Management Services

• Acting as a portfolio manager on behalf of clients with securities portfolios, including foreign funds.

• Managing the acquisition or disposal of securities portfolios, including investment funds.

• Overseeing discretionary accounts for clients, which can include Labuan private funds.

2. Investment Services

• Conducting thorough securities analysis and making investment recommendations based on specific objectives.

• Offering advisory services concerning securities, including issuing research reports and market analysis.

• Providing consultancy on corporate finance and financial planning matters for corporate clients.

3. Administrative Services

• Handling submissions to the Labuan Financial Services Authority (Labuan FSA) on behalf of clients in compliance with reporting requirements.

• Issuing relevant documents deemed as prospectuses in compliance with financial regulations.

4. Dealing in Securities

• Quoting and dealing in securities prices.

• Facilitating the sale or purchase of securities, including those not listed on a stock exchange.

• Underwriting securities and managing their placement out of such underwritten securities.

1. Tax Neutrality
   Labuan IBFC offers a tax-efficient environment for substance creation, allowing for tax neutrality and currency neutrality. This cost-efficient jurisdiction is ideal for establishing fund management entities with minimal regulatory hurdles and attractive taxation.

2. Flexible Fund Structures
   Labuan provides flexibility in fund structures, including private funds, umbrella funds, and the use of PCC vehicles. These structures can be applied to both traditional and Shariah-compliant funds, offering versatility to fund managers.

3. Wide Range of Activities
   Fund managers can engage in various activities such as portfolio management, securities trading, dealing in derivatives, underwriting, consultancy, and more. They can also manage discretionary accounts and provide advisory services, making Labuan IBFC an all-encompassing solution for fund managers.

4. International Recognition
   Labuan is globally recognized for its adherence to international standards and best practices. It is one of the key centres for fund administration services globally, with a reputation for operational efficiency and multilingual talent.

5. Regulatory Flexibility and Certainty
   Labuan’s regulatory framework is robust, yet flexible, ensuring that fund managers have access to a business-friendly environment. Labuan IBFC operates under a liberal exchange control environment and allows fund managers to manage both Labuan and non-Labuan funds.

6. Access to Double Taxation Agreements (DTAs)
   Labuan entities benefit from Malaysia’s extensive network of more than 70 Double Taxation Agreements (DTAs), which allow fund managers to maximize tax efficiencies and reduce exposure to multiple layers of taxation.

7. Minimal Operational Requirements
   There is no requirement for local or domestic directors or principal officers. Additionally, no withholding taxes are imposed on income distributions, and no stamp duty is charged on instruments executed by a Labuan entity in connection with Labuan business activities.

8. Comprehensive Support and Professional Network
   Labuan offers fund managers access to a broad range of professional services, both within Malaysia and internationally. This ensures that fund managers can rely on expert support for fund setup, management, and ongoing operations.

9. Strategic Location
   Positioned in the heart of Asia, Labuan offers fund managers strategic proximity to major financial hubs like Singapore and Hong Kong. Its shared time zone with key Asian cities allows for seamless operations across different regions.

10. Digital and Shariah Compliant Options
    Labuan’s fund management framework is digitally facilitative, allowing for funds to be managed on digital platforms, and provides Shariah-compliant options, making it a diverse hub for fund managers with a global client base.

11. Adoption of AI and Fintech
    Labuan encourages innovation in the fund management space, particularly through the adoption of AI and fintech solutions. 

Licensing and Operational Requirements for a Labuan Fund Manager License To qualify for a Labuan Fund Manager License, applicants must:

• Hold a minimum paid-up capital of MYR 300,000.

• Maintain professional indemnity insurance of at least MYR 1 million.

• Establish an operational office with two full-time employees and minimum spending of MYR 100,000 annually.

• Ensure strict compliance with regulatory requirements, including internal policies on risk management and corporate governance.

• Submit audited financial reports within six months of the end of the financial year.

With these advantageous terms, fund managers can optimize their operations while benefiting from Labuan’s business-friendly environment.