ZRC INTERNATIONAL TRUST INC

A. Introduction

 

 

Labuan IBFC offers a variety of Fund and Fund management vehicle to be utilized by the key player to their advantageous. Fund and Fund Management activities in Labuan can be divided into two main category which is conventional and Islamic Fund. The principals governing legislation of Fund and Fund activities in Labuan is Labuan Financial Services and Securities Act, 2010 (“LFSSA”) and their Islamic counterparts under Labuan Islamic Financial Services and Securities Act, 2010 (LIFSSA).

 

In general, Labuan Fund activities also known as the Mutual Fund. According to LFSSA, 2010 Mutual Fund or Fund is define as a Labuan company, a corporation incorporated under the laws of any recognised country or jurisdiction, a partnership, a protected cell company, a foundation, or a unit trust which;

 

• collects and pools funds for the purpose of collective investment with the aim of spreading investment risk; and

 

• issues interests in a mutual fund which entitles the holder to redeem his investments that is agreed upon by the parties and receive an amount computed by reference to the value of a proportionate interest in the whole or part of the net assets of the aforesaid types of entities, as the case may be, and includes an umbrella fund whose interests in a mutual fund or units are split into a number of different class funds or sub funds and whose participants are entitled to exchange rights in one part for rights in another;

 

There are two types of funds are prescribed under the LFSSA 2010, namely the Private Funds and Public Funds. In 2010, significant changes made to the Labuan Mutual Fund with the introduction of new entities such as Protected Cell Company, Labuan Limited Liability Partnership and Labuan Foundation to be utilized as a vehicle for Mutual Fund establishment in Labuan IBFC. The Act, also introduced a flexibly and lenient requirement for the establishment of Private Fund in Labuan such as minimum capital requirement and Labuan fund management licence for a private fund manager are waived.

 

In addition to the above, due to the growing market and demand of Islamic financial products, Labuan IBFC has introduce the Labuan Islamic Financial Services and Securities Act, 2010 (LIFSSA). With the introduction of Islamic funds in the market in addition to the conventional it will offers more attractive business opportunity for the key players to structure their Fund and Fund management activities in Labuan IBFC. 

 

 

B. Governing Laws

 

 

The Mutual Fund activities in Labuan IBFC is mainly regulated under the Labuan Financial Services and Securities Act, 2010 (“LFSSA”) and Labuan Islamic Financial Services and Securities Act, 2010 (“LIFSSA”). The other governing legislation apart from the above is Labuan Companies Act, 1990 Labuan Business Activity Tax Act, 1990, Labuan Limited Partnerships and Labuan Limited Liability Partnerships Act, 2010, Labuan Foundations Act, 2010.

 

Part III of the LFSSA, 2010 has divided the Mutual Fund in Labuan into two types of Funds which is Private Fund and Public Fund.

 

 

C. Labuan Private Fund

 

 

The Labuan Private Fund mainly governed by Part III, Division 2 of Subdivision 1 of the LFSSA, 2010 and under Part IV of the LIFSSA, 2010. Sections 2(1) of the LFSSA, 2010 define the Private Fund as;

 

• not offered to the general public

 

•  The shares is owned or held by not more than 50 investors, and where the first time investment of said investors is not less than MYR 250,000 or its equivalent in any foreign currency, or

 

• The shares is owned by any number of investors, where the first time investment of each of the investors is not less than MYR500,000 or equivalent in foreign currency; or

 

• Any fund designated by the Act also falls into this category.

 

 

With the introduction of the new legislations in 2010, the requirement to establish the Labuan Private Fund is more relaxed. The applicant no longer required to get the consent from the Labuan Authority to carry on Labuan Private Fund business. The application process for the establishment of Private Fund is easier and hassle free. A private fund can carry on its affairs by giving notice in writing of its scope and nature of business to Labuan FSA. The notification shall be accompanied with an information memorandum or such other offering document and should be lodged through a Labuan licensed entity. The information memorandum or such other offering document will be deemed as a prospectus and a lodgement fee of RM2,000  (USD600) is applicable.

 

 

C. Labuan Public Fund

 

 

The Public Fund define under section 2(1) of LFSSA, 2010 as a mutual fund other than a private fund. In general, a Public Fund would offer its share for subscription to the general public by means of a prospectus or any other means. An Islamic Public Funds are public funds that are in compliance with Shariah principles.

 

No public fund shall carry on business in or from within Labuan unless it has been registered under Section 33(1)(a) of the Labuan Financial Services and Securities Act 2010 (LFSSA) or in the case of an Islamic public fund, Section 38(1)(a) of the Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA). The annual fee payable is RM2,000 (USD600).

 

A Labuan PCC shall only conduct:

 

• Labuan captive insurance business, on such terms as provided under Part VII of the Labuan Financial Services and Securities Act 2010 (LFSSA);

• Labuan captive takaful business, on such terms as provided under Part VII of the Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA); or

• A mutual fund business as defined under Part III of the LFSSA; and 

• Business as an Islamic mutual fund as defined under Part IV of the LIFSSA.

 

 

C. Fund Management Company

 

 

Fund Management Company required to be licensed under the Act. The LIFSSA, 2010 defines a fund management company or manager as a person, who for valuable consideration, provides management services and/or investment advice, or administrative services in respect of securities for the purposes of investment, investment advisory services, fund manufacturing services or such other activity as may be prescribed by Labuan FSA.

 

Sections 40 to 44 of the Labuan Financial Services and Securities Act 2010, contains detailed requirements and prerequisites applicable to a Labuan fund Management Company. In addition, a licensed fund management company from a recognised jurisdiction or a Labuan company set-up by individual fund managers, who are licensed by relevant home supervisory authority, also qualifies to apply as a fund manager.

 

 

 

Our dedicated teams are more than happy to assist you in establishing, structuring and planning your Labuan Mutual Fund establishment and licensing. Contact us today at info@zrctrust.com for free initial consultation without any obligation.