Factoring Business In Labuan IBFC
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Factoring business means the business of acquiring debts due to any person as defined under the Labuan Financial Services and Securities Act 2010.

A. Minimum Eligibility Criteria of Applicant
  • A Labuan company incorporated or registered under the Labuan Companies Act 1990;
  • Factoring companies registered under the Banking and Financial Institutions Act 1989;
  • Special Purpose Vehicle (SPV) set up to facilitate inter-company factoring transactions; and
  • No adverse report from any reliable sources

B. Operational Requirements
  • Has an option to either set up an office in Labuan or operate through its registered office. However all transactions must be done through Labuan and adequate and proper records and books of accounts must be maintained in Labuan;
  • Must maintain capital sufficient to manage the company’s daily operations;
  • Must transact business only in foreign currency and not deal in Malaysian Ringgit except for the purpose of defraying administrative and statutory expenses;
  • Prohibited from dealing with Malaysian residents other than those approved by the Bank Negara Malaysia;
  • Must conduct its business with due diligence and sound principles and comply with the local laws and regulations where it services its clients;
  • Indicate clearly its name on its letterhead, stationery and other documents;
  • Must appoint an auditor;
  • Submit to Labuan FSA within three (3) months after the close of each financial year, one copy of its audited annual balance sheet and profit and loss accounts;
  • Provide statistics and information as required by Labuan FSA in relation to prudential information, general business conduct and volume and direction of business in Labuan;
  • Must notify Labuan FSA of any change to its constituent documents, shareholdings, management or business plan; and
  • Any other requirements issued by Labuan FSA from time to time.

C. Application Requirements
  • Nature of business of the applicant;
  • Information of Seller and Debtor;
  • Composition of the Board of Directors and senior management of the applicant, prior written approval of Labuan FSA must be obtained for the appointment of directors, controller or CEO;
  • Profile of shareholder(s)
  • Business plan detailing the operations and strategies of the applicant. This includes:
    • Business objectives
    • Details of the Receivables (asset securitisation, type and value)
    • Details of the Transaction (expected monthly sales and receivables, discounted price, funding requirement)
    • Place of Business
    • Manpower Planning (please specify job position and number of staff for management office and marketing office)
    • External Auditor, Internal Auditor and Compliance Officer
    • Financial Year End, Currency and Accounting Standards for Financial Statements
  • Three Years Financial Projection;
  • Audited financial statements of the applicant for the last 3 years, if applicable,
  • Diagram of the factoring structure
  • Any other information relevant to the application
D. Licensing Fees

License processing fee (one-off) RM1,000
Annual license fee
  • RM40,000 for those with physical presence; or
  • RM60,000 for those without physical presence
  • The annual license fee is payable when the license is approved by Labuan FSA and remains valid until 31 December of the year of approval. Subsequent annual license fee is payable on or before 15 January of each calendar year

    E. Features of Labuan Company carrying on factoring business
    Share Capital
    Permitted Currencies Any foreign currency except Ringgit Malaysia
    Standard currency US$
    Minimum issued capital Capital must be sufficient to manage the company’s daily operations
    Authorised capital N/A
    Par / Nominal value N/A

    Directors
    Minimum Two (2)
    Corporate directors Not Allowed, only individual
    Local directors requirements Optional
    Location of meeting Anywhere but for commercial substance purpose, it is highly recommended to hold meetings in Labuan, physically and/or originated from Labuan, if via tele-conference meeting
    Minimum numbers of meeting Per Articles of Association
    Publicly accessible records No

    Shareholders
    Minimum One (1)
    Bearer shares No
    Corporate shareholders Allowed
    Local shareholders requirements No
    Location of meeting Anywhere
    Minimum numbers of meeting One (1) annually
    Publicly accessible records No

    Company Secretary
    Minimum One (1)
    Requirements A resident secretary who must be a Trust Officer of a trust company OR a Labuan / Malaysian domestic company wholly-owned by the Labuan trust company

    Registered Office
    Requirements Principal office of a trust company in Labuan

    Accounts
    Records Kept in Labuan
    Preparation of accounts Yes
    Audit requirements and filing Required for licensed companies
    Publicly accessible records No

    Annual Requirements
    Annual Return Not later than 30 days from the anniversary date of incorporation of the Labuan company
    Annual Government Fee On or before the anniversary date of incorporation of the Labuan company
    Tax Filing Annual tax return needs to be filed with the Malaysian Director General of Inland Revenue by 31 March of that year of assessment. Normally, an extension of time for filing is allowed by the Inland Revenue.

    Taxation
    Factoring activities RM20,000/- OR 3% of net audited profits, upon election annually
    Others No withholding tax, no capital gain tax, no stamp duty on offshore instruments


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