Registration of company in Labuan - Offshore Trading

Registration of an offshore company in Labuan

Labuan became an offshore territory controlled by Malaysia in October 1990. In 2010, the Financial Services Authority of Labuan was established there, which coordinates offshore companies. The legislation of Malaysia introduced a number of amendments and clarifications that allowed to establish transparent business contacts with foreign business owners and acquire the status of IBFC (international financial and business services).

Labuan is an authoritative region for carrying out business operations in the opinionof international supervisory and controlling bodies.

The main legislative documents regulating economic affairs are as follows:

• Offshore Banking 1990;

• Labuan Offshore Trusts 1996;

• Labuan Offshore Financial Services Authority 1996;

• Labuan Offshore Securities Industry 1998;

• Labuan Offshore Business Activity Tax 1990.

The process of registration

International investors interested in registering a company can choose from two forms of incorporation approved by the relevant law of jurisdiction (Companies Act since 1990):

• trading companies;

• holding (non-trading, non-commercial)companies.

Corresponding license is required for verification of trust, leasing, insurance and banking institutions of offshore type from the governmental bodies of Malaysia. Other types of activities are not licensed.

Offshore companies are divided into 4 categories depending on the form of liability:

• Company Limited by Guarantee;

• Private Unlimited Company;

• Private Company Limited by Shares;

• Public Company Limited by Shares.

Private firms are distinguished by the following advantages:

• exemption from the submission of balance reporting;

• the right to credit granting to own directors and third-party companies concerned;

• minimum authorized capital is 2 ringgits;

• opportunity to acquire the status of "exempt private company";

• residence has no impact on the right to be a shareholder;

• maximum number of shareholders is 50.

Depending on the type of company, relevant fixed fee (not exceeding 6,000 ringgits) is levied from it. The cost for selection and transcription of a unique name equals to 50 ringgits.

Local licensed trust organization is entitled to prepare registration certificates and acts, as well as be engaged in the process of incorporation. There must be at least one resident or non-resident director (natural or legal person) and local secretary. On average, registration processes last no more than a month. In Labuan, there are no specific requirements for the company's minimum capital, but there is a generally accepted rate of 10,000 USD. In fact, nominalamount of 500 USD is contributed to the corporate bank account.

Terms of taxation of the companies of Labuan

Non-commercial companies are not subject to tax. The foregoing include holdings-owners of assets in the form of securities, real estate and bank deposits.

Trading companies pay either a fixed tax of 20,000 ringgits, or 3% of net income (that assumes audit control).

Please, contact lawyers Law&Trust International for more detailed information and assistance in the issue of registering an offshore company in the territory of this jurisdiction.