LABUAN COMPANIES GENERAL INFORMATION

SHORT FORMS :
LOC: Labuan Offshore Company
FOC: Foreign Offshore Company (Branch)
LOFSA: Labuan Offshore Financial Services Authority
OCA: Labuan Offshore Companies Act 1990

1. Company law:

OCA

2. Types of offshore companies:

LOC and FOC

3. Companies with no shares issued:

Not permitted

4. Are bearer shares allowed:

No

5. Capital requirements:

LOC: Minimum one share in any denomination for non-licensed entities. For licensed entities, the issued capital requirement depends on type of licence. FOC: Dependent on its place of incorporation.

6. Government fees: Stamp duty is not applicable while registration fee is based on authorised capital, payable to
LOFSA

7. Annual fees paid to authorities:

LOC: RM1,500

Branch: RM5,300
Licensed entities pay additional fees

8. Applicable taxation rates:

Offshore trading companies may opt to pay 3% on net audited profits or a fixed sum of RM20,000 . Offshore non-trading companies pay no tax. Companies carrying on both trading and non-trading activities are deemed to be carrying on trading activities taxed accordingly. From Year of Assessment 2008, offshore companies may elect to be taxed under the Malaysian Income Tax Act 1967 to secure more certainty to Malaysia's treaty benefits. Such election shall be irrevocable.

9. What are the requirements for the use of local representatives/professionals?

The services of a Labuan trust company are required to incorporate the offshore company and for statutory filings of the offshore company. An officer, who is an approved officer of a Labuan trust company or a subsidiary company wholly owned by the Labuan trust company, must be appointed as the Resident Secretary of the offshore company.

10. Are shelf companies readily available?

No, this is almost made redundant by the fact that LOCs can be incorporated within one to three working days.

11. Minimum number of members:

One member who can either be an individual or a corporate entity.

12. Registered office:

Must be the principal office of a Labuan trust company.

13. Directors and secretary:

Minimum one director who can either be an individual or a corporate entity. One resident secretary (see no. 9) must be appointed. Additional secretaries may be appointed.

14. Are Corporate Directors and Corporate Secretaries permitted:

Yes

15. Meetings:

There is no requirement as to the location of meetings. The OCA permits members’ resolutions to be passed by circularisation or other electronic means.

16. Annual return:

Annual returns must be filed not later than 30 days prior to the anniversary of the date of incorporation.

17. Must financial statements of a company be audited?

Required for licensed entities, those making public offerings and entities opting to pay 3% tax (see no. 8).

18. Is disclosure of profits required by filing balance sheets with annual returns?

Accounts not required to be filed with annual returns . However, if the members of an offshore company adopt audited accounts then it is necessary to file the same with LOFSA (see no. 17)

19. Are there any exchange control or other financial restraints imposed upon an offshore company?

No exchange controls on foreign currency transactions. Offshore companies are not permitted to carry out transactions in Malaysian Ringgit, except for defraying administrative expenses, and making permitted investments in Malaysian securities. Certain licensed companies are permitted to deal in Ringgit subject to licence conditions.

20. Offshore companies incorporated or registered in the year 2008:

571

21. Total number of offshore companies formed or registered as at 31 December 2008:

6868

22. How, if any, is migration into and out of the jurisdiction achieved?

Provided for in the OCA through registration and approved by members, creditors and debenture-holders, and the authorities of both jurisdictions.

23. Does Labuan have access to any tax treaties?

Malaysia has signed more than sixty double-tax agreements with its trading partners, most of which also apply to Labuan.