Qualifications

A Labuan company incorporated or registered under the Labuan Companies Act 1990 (LCA); or 2.2 A Labuan company licensed as a Labuan managed trust company.

Application Requirements

The applicant for a Labuan trust company licence shall:

• Submit a duly completed Form TL - Application for Licence to Carry On Labuan Trust Company Business as required under Section 61(1) of LFSSA;
• Provide a business plan that includes but not limited to the following;
  
  • Types of product and services to be offered;
  • Target market, specifying the clients, geographical spread and industry focus; 
  • Management team;
  • Manpower planning/organisation chart; and 
  • Three (3) years financial projections (properly drawn up income statements and balance sheet quoted in foreign currency);
• Have a capital or working fund of at least RM150,000 or its equivalent in any foreign currency; 4.1.4 Obtain a professional indemnity insurance policy with a coverage of not less than RM1 million or its equivalent in any foreign currency and remains indemnified throughout its operations;
• Provide a letter of guarantee or undertaking to Labuan FSA for the liability of the Labuan trust company; 
• Provide full disclosure of shareholdings of the company including the ultimate beneficiaries including submission of corporate profile (e.g. name and type of legal entity, principal business/activity, Board of Directors) for corporate shareholder and detailed background (e.g. copy of passport or ID and comprehensive resume) for individual shareholder; and 
• Ensure that the directors and officers responsible for the management of the proposed Labuan trust company in Labuan IBFC are fit and proper persons pursuant to section 4 of LFSSA and the Guidelines on Fit and Proper Person issued by Labuan FSA.

Labuan FSA may request for additional information as deemed necessary.

Operational Requirements

A licensed Labuan trust company shall:

• Establish a fully operational office in Labuan;
• Maintain separate telephone and facsimile lines and have its own letterhead and stationeries; 5.1.3 Appoint at least two trust officers approved by Labuan FSA, one of whom must be based in Labuan;
• Have proper arrangements in place to account for and keep all assets and other valuables that it has received in its capacity as trustee duly separated from its own assets and liabilities; 
• Maintain capital or working funds of at least RM150,000 or its equivalent in any foreign currency at all times;
• Obtain the written consent from Labuan FSA prior to making any change to its shareholding and directorship including any establishment of any subsidiary or office other than its principal place of business in Labuan; 
• Ensure compliance with the Guidelines Anti-Money Laundering and Counter Financing of Terrorism; 
• Ensure all its book and records including records of its clients are kept and made available for inspection in Labuan; 
• Comply with guidelines, directive and reporting requirements issued by Labuan FSA; and 
• Notify Labuan FSA of any change to its place of business in Labuan through lodgement of Form 4 of the LFSSA and Form 5 of LFSSA for any change to its trust officers within seven days from the effective date of the change specified.

Labuan trust company acting as trustee of a Labuan Islamic trust under the Labuan Islamic Financial Services and Securities Act 2010 shall appoint a qualified person as a Shariah adviser, or consult a qualified person to advise the operations and ensure Shariah compliance.

Annual and Licence Fee

• The licence fee amounting to RM15,000 is payable to Labuan FSA upon the grant of licence.
• The subsequent payment of annual fee is payable not later than 15 January of each year

Labuan Trust Companies

The number of trust companies continued to grow in 2011, reaching 31 [2010: 24] with seven new trust companies approved to operate in Labuan at the end of 2011. The trust companies mainly render corporate secretarial services and administrative work for Labuan companies, trusteeship for bond issuances, funds and trust products, administration services for mutual funds and business process outsourcing services to their global operations. With improvement and expansion in the business performance of trust companies, the number of employees in the trust companies had also increased by 28.7% to 422 [2010: 328].

The trust companies also handle the work permit applications for expatriates working in Labuan companies. On 6 July 2011, Labuan FSA issued the Guidelines on Work Permit Application in Labuan IBFC to liberalize the requirement for the applications of work permit for expatriates working in Labuan companies. With the issuance of the guidelines, applicants are now allowed to use the address of their appointed trust company in Labuan as their workplace address when applying for the permit. However the trust company is required to provide a letter of recommendation supporting the application and confirming that strict due diligence on the applicant has been conducted prior to submitting the application to Labuan FSA.

WHAT ARE THE OPERATIONAL REQUIREMENTS FOR A TRUST COMPANY?

A Trust Company is required to:

• Appoint at least two approved trust officers in Labuan, who can be employees of the manager, i.e. the Labuan trust company.
• Maintain separate telephone and facsimile lines for the company.
• Have its own letterhead and stationery.
• Keep all its books and records, and those of its clients, in Labuan IBFC.

WHAT ARE THE REGISTRATION REQUIREMENTS FOR TRUST COMPANIES?

A company that seeks to register itself as a Trust Company must be a company incorporated or registered under the LCA. The name of the company shall include the word ‘Trust’, ‘Trustee’ or other such words as approved by the Registrar. In addition, the company must comply with the following:

• Its authorised capital must be not less than MYR500,000 or its equivalent in any other foreign currency divided into shares of not less than MYR10 each or its equivalent in that foreign currency
• At least one half of the amount of every share issued by the applicant remains unpaid and is not liable to be called up except in the event and for the purpose of winding-up or dissolution
• At least MYR150,000 or its equivalent in any foreign currency of the authorised capital has been paid up
• The company has a professional indemnity insurance of not less than MYR1 million or its equivalent in any foreign currency or deposited with Labuan FSA securities to the value of MYR100,000
• The company is able to meet its obligations without taking into account the securities deposited with Labuan FSA
• The directors and officers designated as trust officers, who are responsible for the management of the Trust Company in Labuan, are fit and proper persons and remain as such throughout their appointment with the Trust Company

ARE THERE ANY SPECIFIC REQUIREMENTS RELATING TO TRUST OFFICERS?

Yes. A trust officer should be:

• An advocate and solicitor or a person who possesses a degree in law
• A member of the Malaysian Institute of Accountants or any other association of accountants approved by Labuan FSA
• An associate/fellow of any association of bankers, insurers, company secretaries or similar bodies
• A person who has had uninterrupted service of not less than ten years in any public service or statutory body
• Any other person comparable to the above

WHAT IS A MANAGED TRUST COMPANY?

A Managed Trust Company (MTC) is a trust company registered under the Labuan Companies Act 1990 (LCA), and is managed by a fully-operational Trust Company in Labuan.

The MTC is set up by a parent company to provide offshore trust services to its clients, while being managed by a third party (a local licensed Trust Company). This allows the parent company to extend its product offering to its clients without having to set up or maintain a presence in Labuan, thus avoiding the substantial expense and fixed costs of establishing, resourcing and equipping a new office.

In addition, the MTC would enjoy access provided by the managing company to specialists and experienced professionals who have existing relationships with local regulators, thus allowing the parent company to establish an offshore presence while maintaining its high standard of service.