Labuan Fund Management License

a) Introduction
A fund management company or fund manager is a person who, for valuable consideration provides management services alone or with investment advice or administrative services in respect of securities for the purposes of investment, including dealing in securities, or such other activity as may be specified by Labuan FSA.

b) Eligible to apply
• An individual who holds a relevant degree or professional qualification to carry on fund management activities. Labuan FSA may also consider an applicant with at least minimum qualification of diploma holder and 3 years’ relevant experiences in capital market or direct experiences in fund management activities,
• An approved fund manager or any provider of such services from a country or jurisdiction who is a member of the International Organization of Securities Commission (IOSCO) or
• A person who does not fulfil item 1 and item 2 may also be considered, provided that the fund management activities are run and managed by suitably qualified and experienced individuals.

c) Requirements to operate
• The Labuan fund manager must maintain a paid-up capital unimpaired by losses of at least RM 300,000 equivalent in any foreign currency throughout its operations. Where the Labuan fund manager has Asset Under Management (AUM) of more than RM150 million, it must maintain additional capital equivalent to 0.2% of the AUM in excess of RM 150 million.
• Maintain a professional indemnity insurance policy with coverage of not less than RM 1 million or its equivalent in any foreign currency throughout its operations.
• Maintain a registered office in Labuan and ensure that the business must be carried on in, from or through Labuan.
• Appoint an approved auditor to carry out an annual audit of its accounts in respect of the business operations pursuant to section 174 of LFSSA and section 135 of LIFSSA.
• Appointment of qualified person to its internal Shariah advisory board for Islamic Securities Licensee is required to ensure that its management and operation are in compliance with Shariah principles. In this regard, the Directive on Islamic financial business in Labuan IBFC shall also be observed.
• Obtain prior approval from Labuan FSA for any appointment of director(s) and shareholder(s).
• Submission of Audited Account to LFSA within 6 months after financial year ended.

d) Applicable Taxation
• A Labuan Company involved in fund management business is deemed a Labuan Trading Company under Section 2 of the Labuan Business Activity Tax Act, hence the company has to pay a 3% of audited net profit as its tax with fulfilled its substance requirements.
• Fails to comply with the substance requirement for a basis period for a year of assessment shall be charged to tax at the rate of twenty- four per cent (24%) upon its chargeable profits for that year of assessment.

e) Substance Requirements
Pursuant to section 2B (1) of LBATA, the Labuan entities shall, for the purpose of the Labuan business activity have,
• an adequate number of full-time employees in Labuan and
• an adequate amount of annual operating expenditure in Labuan, as prescribed by the Minister by regulations made under this Act.
To benefit under LBATA, a Labuan Fund Manager will need to comply with the substance requirements of minimum number of two (2) full time employees in Labuan and an annual operating expenditure in Labuan of RM 100,000.