Print ready version
In line with the Malaysian government’s move to liberalise the financial sector, Labuan Holding companies were permitted to set up an operational and management office in the capital city of Kuala Lumpur. This is to facilitate the business of the Labuan Holding Company (“LHC”) by leveraging, amongst others, on the infrastructure, human capital, professional services and service providers, as well as recreational and residential facilities that are available in Kuala Lumpur. “LHC” here refers to a Labuan company incorporated under the Labuan Companies Act 1990 (“LCA”) that carries on permitted activities stipulated in this document.
Application for approval to set up an operational and management office should be submitted to the Labuan FSA prior to establishment of the office.
- Company incorporated under LCA or person intending to incorporate a company under LCA
- Applicant must have international and/or regional operations/businesses
- The LHC must carry on business with non-resident of Malaysia and in foreign currency, except as permitted under the LCA and the Exchange Control Act 1953.
- Subject to Labuan FSA’s approval, the LHC is allowed to carry on any one or a combination of the following business activities from its office in Kuala Lumpur:
- Holding of investment in securities, stocks, shares, loans, deposits or immovable properties.
- Providing management services including administrative, human resource, accounting and backroom support services to:-
- related companies within Malaysia; or
- related or non-related companies outside Malaysia
- Managing surplus funds and providing credit facilities to related companies within the group in and outside Malaysia.
- Trading or invoicing activities outside Malaysia
- Location and Address of the office
A LHC is required to inform Labuan FSA the address and contact numbers of its office in Kuala Lumpur prior to the commencement of its operations and any subsequent changes to this address
The office of the LHC in Kuala Lumpur must be -
- separated from the office of other entity/company; and
- managed by its own personnel with independent books and records
- Name and Signboard
The name of a LHC must be easily legible in Romanised characters, printed on a signboard affixed at the entrance of the office
The signboard must contain the following information -
- the Labuan Holding Company’s incorporation number, and
- the words “Labuan Company”
- Directors and Principal Officer
A LHC shall appoint a minimum of one (1) director of any nationality, however no corporate director is allowed. In addition, the LHC is required to notify Labuan FSA of any change of its Principal Officer.
- The LHC must have sufficient paid-up capital to commensurate, or in accordance, with its operations and activities
- The LHC must make an irrevocable election to be taxed under the Income Tax Act 1967 pursuant to Section 3A of Labuan Business Activity Tax Act 1990. Hence, the LHC is required to :
- comply with the provisions of the Malaysian Income Tax Act 1967
- submit an annual audited accounts to Labuan FSA; and
- conduct an Annual General Meeting in Malaysia
- The LHC must provide statistical information to Labuan FSA in a manner and frequency as may be determined by Labuan FSA
- Subject to relevant provision of the laws relating to disclosure of information, the LHC will provide Labuan FSA with any information relating to its business and operations whenever it is required
- To comply with other requirements of the LCA and the relevant laws, whichever applicable, including obtaining work permit from the Immigration Department of Malaysia for expatriates employed by the LHC in Malaysia
All applications for the setting up of an operational and management office of a LHC in Kuala Lumpur should be directed to the Director General, Labuan FSA and should include, amongst others the following information:
- Proposed name of the LHC
- Nature of business of the applicant
- Business plan including the purpose of co-locating the office
- Organisation chart of the proposed office in Kuala Lumpur including the estimated number of staff
- Information on director(s) and shareholder(s) of the applicant Company
- Biodata of the proposed Principal Officer who will be managing the office. “Principal Officer” means the principal executive officer of the company by whatever name it is referred to and whether or not he is a director and who is accustomed to act under the instructions of the applicant
Notwithstanding the above, Labuan FSA may request additional information for the purpose of processing the application.
Labuan FSA reserves the right to revoke the approval if Labuan FSA is satisfied, based on the information made available to it, that the LHC has not complied with any laws or requirements.
Notwithstanding the above, the LHC may surrender the approval by notifying Labuan FSA in writing not less than one (1) month from the date it intends to close the office.
Processing fee (once-off)
The annual license fee is payable once approval to co-locate is given by Labuan FSA and remains valid until 31 December of the year of approval. Subsequent annual fee is payable on or before 15 January of each calendar year
The information in this document is not advice of any kind but general information only and should not be relied on as legal advice. Kensington Trust Group recommends seeking professional advice on legal or tax issues affecting you before relying on it. While Kensington Trust Group tries to ensure that the content of this document is accurate, adequate or complete, it does not represent or warrant, express or implied, its accuracy, correctness, completeness or use of any of the information. Kensington Trust Group does not assume legal liability for any loss suffered as a result of or in relation to the use of this document. To the extent permitted by law, Kensington Trust Group excludes any liability for negligence, for any loss, including indirect or consequential damages arising from or in relation to the use of this document.