FRAMEWORK FOR THE MANAGEMENT, GOVERNANCE AND ADMINISTRATION OF - - PowerPoint PPT Presentation

FRAMEWORK FOR THE MANAGEMENT, GOVERNANCE AND ADMINISTRATION OF LABUAN WAQF STRUCTURES

24 October 2018 Farah Deba Mohamed Sofian Partner, WONG LU PEEN & TUNKU ALINA Chairperson, STEP MALAYSIA

Scope

• 1. Legal structure of WAQF Foundation under Labuan International

WAQF Foundation (‘LIWF’)

• 2. Management of LIWF
• Founder
• Council
• Supervisory Person
• Officers

3. Mechanism for Good Governance

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Literal Meaning

Waqafa Stop, contain, preserve

Legal Definition

A voluntary permanent irrevocable dedication of a portion of one’s wealth to ALLAH SWT Islamic endowment of property to be held in trust and used for charitable or religious purposes

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Introduction: What is WAQF ?

Basic Characteristics of Waqf

BENEVOLENT GIFT BELONGS TO ALLAH NOT INHERITABLE

PRESERVED OR REPLACED INTENTION TO WAQF

LEGAL STRUCTURE OF LABUAN INTERNATIONAL WAQF FOUNDATION (LIWF)

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Basic Tenets of LIWF

• I. TO SERVE A RELIGIOUS PURPOSE: SHARIAH-

COMPLIANT

• II. LEGAL ENTITY: LABUAN FOUNDATIONS ACT

2010

Other Available Legal Structures

TRUST FOUNDATION COMPANY Settlor Reserved power Distribution Trustee Trust Deed Property Beneficiaries Founder Reserved rights Council of Officers Charter and Articles of Registration Assets and Property Beneficiaries Distribution Subscribers Memorandum Dividend Board of Directors Articles of Association Assets Shareholders

ASSETS ARE THE PROPERTIES OF THE FOUNDATION NOT OWNED BY FOUNDER OR SHAREHOLDERS NOT INHERITABLE NOT SUBDIVIDED BENEFICIARY enjoy the Benefits

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Waqf As A Legal Entity

‘Incorporated Waqf’

Labuan Foundations Act 2010 Legal Personality.

Management Control

Council

Shariah Advisor

Supervisory Person Officer

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Establishment of Waqf

LIWF is an Islamic Foundation

• Registered under Section 107 Labuan Islamic Financial Services &

Securities Act 2010

• Provisions of Labuan Foundations Act 2010 apply

Guidelines on the Establishment of LIWF

• Section 4A Labuan Financial Services Authority Act 1966 ( to clarify

Part III, IV, V, VI of Labuan Foundations Act 2010 & Part IX of LIFSSA)

FAILURE TO COMPLY WITH GUIDELINES COMPOUNDING OFFENCE: S 36B of Labuan Financial Services Authority Act 1996 ADMINSITRATIVE PENALTIES: S 36G of Labuan Financial Services Authority Act 1996

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Failure to Comply with Guidelines

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LIWF Structure in a Nutshell

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LABUAN INTERNATIONAL WAQF FOUNDATION (“LIWF”) Founder (Waqif) LIWF (acts as Trustee/ Nazir/Mutawalli) 1. Charter (Waqfiyyah) 2. Sharia Adviser 3. Supervisory person 4. Council 5. Officer 6. Secretary

Endow assets through Waqf Distribution

• f income/

usufruct

Beneficiaries Governance and management of Waqf foundation and assets Governed by Sharia principles on Waqf

FLEXIBILITY OF LIWF

• Waqf income

reserved for family & goes to charitable purpose when none

• f family members

exist

• Waqf income

shared between family members and charitable purpose

• Waqf income for

charitable purpose

• Waqf income

retained by founder and goes to charitable purpose after his death Self dedicated Waqf (Waqf ‘Ala Nafs) Charitable Waqf (Waqf Khayri) Family Waqf (Waqf Ahli) Joint Waqf (Waqf Mushtarak)

Recipient of charitable purpose defined by founder and endorsed by Shariah Adviser

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GOVERNANCE & MANAGEMENT OF LABUAN INTERNATIONAL WAQF FOUNDATION:

“Separation of Powers” “Check & Balance”

FOUNDER PURPOSE & BENEFICIARIES TERMS & CONDITIONS GOVERNING THE FOUNDATION

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Charter (Waqfiyyah) of LIWF

• GOVERNING

BODY

• BENEFICIARIES

(MAWQUF ALAIH)

• TRUSTEE

(Nazir/Mutawalli)

• FOUNDER

(WAQIF)

• WAQF PROPERTY

(MAWQUF)

ENDOWMENT

FOUNDATION LEGAL & BENEFICIAL OWNER

FIDUCIARY DUTY of the HIGHEST STANDARD OF CARE & LOYALTY USUFRUCT & BENEFIT

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The Relationship: Founder-Trustee- Governing Body-Beneficiaries

• The one who establishes the Foundation based on his wishes
• Corporate or individual
• Resident or non-resident of Malaysia
• A founder can be a beneficiary

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Founder

• Optional
• Compulsory if the foundation solicits donation. The Council

represents the Foundation.

• Qualification of Council Members as per Founders requirements.
• Resident or non-resident of Malaysia.
• Cannot act as Officer at the same time.
• Ensures compliance by Foundation.

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Council

• Have supervisory powers over the Foundation (in addition & in

lieu of the Council)

• Monitor Council’s decision
• Power to add or remove Officers & Council Members
• Compulsory for foundation that solicit donation from the public

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Supervisory Person

• Mandatory requirement
• At least 1 person initially appointed by Founder
• Administer the Foundation to achieve its purpose or objects
• Officers are required to act in accordance with instruction of

Council

• In the absence of Council or Supervisory Person, Officers acting

jointly shall represent the Foundation

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Officers

• Mandatory requirement
• Qualified person
• To advise the Foundation of its objective, operations &

management & ensure compliance with Shariah principles including waqf, circulars & directives of LFSA

• Must conduct an internal Shariah compliance review/audit

annually

• Non-compliance to be rectified

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Shariah Adviser

• Mandatory requirement
• Must be a Labuan registered trust company
• Compliant agent
• Conduit between Foundation & Labuan FSA

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Secretary

GOOD GOVERNANCE

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Fiduciary Duty: Highest Standard of Care and Loyalty

ACCOUNTABILITY TRANSPARENCY REPORTING PERFORMANCE ETHICS

“MONEY HELD IN PUBLIC TRUST SHOULD BE WELL SPENT, NOT JUST WELL-INTENTIONED”

SUCESSION PLAN WHO ARE THE QUALIFIED PERSONS? EFFECTIVENESS OF THE GOVERNING BODY MISSION FOR CAUSE – NON PROFIT & FOR PROFIT ORGANISATION TRAINING

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Best Practices

Courtesy of: Che Jamaliah & Aderi Adnan

Thank You

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Disclaimer

This presentation should not be regarded as offering a complete explanation of the matters referred to and is subject to changes in law. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Labuan IBFC cannot accept any responsibility for loss occasional to any person acting or refraining from action as a result of any material in this presentation.

LABUAN IBFC INC SDN BHD IS THE OFFICIAL AGENCY ESTABLISHED BY GOVERNMENT OF MALAYSIA TO POSITION LABUAN IBFC AS THE PREFERRED INTERNATIONAL BUSINESS AND FINANCIAL CENTRE IN ASIA PACIFIC