OPPORTUNITIES IN THE NEW FUND MANAGEMENT LANDSCAPE VIA LABUAN by - - PowerPoint PPT Presentation

OPPORTUNITIES IN THE NEW FUND MANAGEMENT LANDSCAPE VIA LABUAN

by Hiu Chee Fatt Director, Business Development Labuan IBFC Inc. Sdn Bhd

International Tax Landscape In A Nutshell

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Labuan International Business And Financial Centre

• Off the coast of Sabah, East Malaysia
• Federal Territory
• About 100,000 population
• Common time zone with major cities
• Where business meets leisure

Connecting Asia’s Economies

70% of Labuan Companies are Asian-based

(as at 2014)

Internationally Recognised

Group of International Finance Centre Supervisors (GIFCS)

Member since 1999

International Organisation of Securities Commissions (IOSCO)

Member since 2003

Group of International Insurance Centre Supervisors (GIICS)

Member since 1999

International Association of Insurance Supervisors (IAIS)

Member since 1998

Islamic Financial Services Board (IFSB)

Member since 1998

Asia/Pacific Group on Money Laundering (APG)

Member since 2000

Labuan IBFC Adheres to OECD’s International Standards and Best Practices International Islamic Financial Market (IIFM)

Member since 2002

Business Activities

Source: Statistics from Labuan FSA’s Annual Report 2017

Banking

(54)

• Wholesale banking
• Investment banking
• Loans/deposit
• Financial guarantees
• Trade finance

Leasing

(380)

Companies

(14,201)

• Investment

holding

• Trading
• Life/general
• Broking
• Captives
• Re-insurance

Insurance

(203)

• Company

incorporation

• Company

administration

• Corporate

secretarial

• Trustee services

Trust Cos.

(50)

• Aviation
• Shipping
• Heavy

machinery

Wealth Management (more than 300) Fund Management (81)

• Business succession
• Estate management
• Legacy planning
• Fund manager
• Mutual funds
• Securities License

Why Labuan IBFC?

• Developed legal framework with wide array of products and services
• Large pool of talents
• Same time zone as the rest of Asia
• Cost effective
• Enable tax substance creation
• Tax efficiency with large double tax treaties
• Labuan companies accepted for listing on:
• National Stock Exchange of Australia
• Hong Kong Stock Exchange
• Singapore Exchange
• NASDAQ Dubai

Labuan Tax

Flexibility

0% Investment holding 3% MYR 20,000 Election for Income Tax Act 1967 Irrevocable election Trading income

Wide Double Taxation Agreements Network

ALBANIA ARGENTINA AUSTRALIA AUSTRIA BAHRAIN BANGLADESH BELGIUM CROATIA IRAN IRELAND ITALY JAPAN JORDAN KAZAKHSTAN KOREA KUWAIT KYRGYZ LAOS LEBANON LUXEMBOURG MALTA MAURITIUS MONGOLIA MOROCCO MYANMAR NAMIBIA NETHERLANDS POLAND QATAR ROMANIA RUSSIA BOSNIA HERZEGOVINA BRUNEI CANADA CHILE CHINA DENMARK EGYPT FIJI FINLAND FRANCE GERMANY HONG KONG HUNGARY INDIA INDONESIA CZECH REPUBLIC NEW ZEALAND NORWAY PAKISTAN PAPUA NEW GUINEA PHILIPPINES SAN MARINO SAUDI ARABIA SEYCHELLES SINGAPORE SOUTH AFRICA SPAIN SRI LANKA SUDAN SWEDEN SWITZERLAND SYRIA THAILAND TURKEY TURKMENISTAN UAE UK USA UZBEKISTAN VENEZUELA VIETNAM

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Labuan’s Legislation

Labuan Financial Services And Securities Act 2010 Labuan Islamic Financial Services And Securities Act 2010 Labuan Foundations Act 2010 Labuan Limited Partnerships & Limited Liability Partnerships Act 2010 Labuan Business Activity Tax Act 1990 Labuan Financial Services Authority Act 1996 Labuan Trusts Act 1996 Labuan Companies Act 1990

New Acts introduced in 2010 Existing Acts enhanced in 2010

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Fund Management

Fund Manager Licence Securities Licence Mutual Funds Protected Cell Company Banking

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FUND MANAGER LICENCE

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Fund Manager – Who Can Apply?

• 1. An individual who holds a relevant degree or professional qualification to carry out fund

management activities.

• 2. Labuan FSA may also consider an applicant with a minimum qualification of diploma holder

and 3 years’ relevant experience in capital market or direct experience in capital market or direct experience in fund management activities.

• 3. 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).

• 4. A person who does not fulfill the above may also be considered, provided that the fund

management business is run and managed by suitably qualified and experienced individuals.

• 5. Fit and proper.

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Fund Manager - Requirements

• 1. Maintain a minimum paid-up capital unimpaired by losses of MYR300,000 equivalent in any

foreign currency.

• 2. Where the Labuan fund manager has Asset Under Management (AUM) of more than MYR150

million, it must maintain additional capital equivalent to 0.2% of the AUM in excess of MYR150 million.

• 3. Maintain a professional indemnity insurance policy with coverage of not less than

MYR1,000,000 or its equivalent in any foreign currency.

• 4. Have at least 2 directors.
• 5. Sound and viable 3-year business plan with adequate human resources and continuing

financial support.

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SECURITIES LICENCE

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Securities Licence – Who Can Apply?

• 1. An individual who holds a relevant degree or professional qualification to carry out the

activities of a securities licensee.

• 2. Labuan FSA may also consider an applicant with a minimum qualification of diploma holder

and 3 years’ relevant experience in capital market or direct experience in capital market or direct experience in permitted activities of a securities licensee.

• 3. A licensed/approved individual who undertakes such securities licensee services, fund

manager or any provider of such services from a relevant regulatory and supervisory Authority

• r country or jurisdiction who is a member of the International Organization of Securities

Commission (IOSCO).

• 4. A person who does not fulfill the above may also be considered, provided that the securities

licensing business is run and managed by suitably qualified and experienced individuals.

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Securities Licence – Requirements

• 1. Maintain a minimum paid-up capital unimpaired by losses of MYR150,000 equivalent in any

foreign currency.

• 2. Maintain a professional indemnity insurance policy with coverage of not less than

MYR1,000,000 or its equivalent in any foreign currency.

• 3. Sound and viable 3-year business plan with adequate human resources and continuing financial

support for the business.

• 4. Fit and proper.

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MUTUAL FUNDS

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Mutual Funds – Public & Private

Labuan mutual funds can be structured as a Labuan company, a corporation incorporated under the laws of any recognised country or jurisdiction, who is a member of the International Organization of Securities Commissions (IOSCO), a partnership, a protected cell company, a foundation or a unit trust. PRIVATE FUND Initial investment per investor in foreign currency not less than the equivalent of MYR250,000. Limited to 50 investors.

• r

Initial investment per investor in foreign currency not less than the equivalent of MYR500,000. Unlimited investors. PUBLIC FUND Any other fund that is not a private fund, or approved by Ministry of Finance as a public fund.

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Private Fund

• 1. Labuan private funds, prior to its launching shall notify Labuan FSA by lodging an information

memorandum through either one of these licensed entities i.e. Labuan trust company, Labuan bank including Islamic bank, Labuan investment bank including Islamic investment bank or Labuan fund manager.

• 2. Manager of Labuan private fund only is not required to be licensed.
• 3. Labuan private funds are not offered to the general public and are owned or held by:

3.1 Not more than 50 investors where the first time investment of each of such investor is not less than MYR250,000 equivalent in any foreign currency; or 3.2 Any number of investors where the first time investment of each such investor is not less than MYR500,000 equivalent in any foreign currency.

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Public Fund

• 1. Labuan public funds, prior to its launching shall register its prospectus with Labuan FSA through

either one of these licensed entities, i.e. Labuan trust company, Labuan bank including Islamic bank, Labuan investment bank including Islamic investment bank or Labuan fund manager.

• 2. A public fund registered with any member of IOSCO jurisdiction, need not be registered as a

public fund with the Labuan FSA so long as the public fund is administered or managed in Labuan by a Labuan licensed fund administrator, custodian, trustee or fund manager. However, it shall notify Labuan FSA of its operations in Labuan IBFC and lodge a prospectus of the public fund with the Labuan FSA.

• 3. Must appoint a fund manager and a custodian or trustee that is approved by Labuan FSA.
• 4. Provide at least half yearly reports to investors.

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Overview – Regulatory Landscape

Non regulated Proportionally regulated Fully regulated Not Flexible Flexible More Flexible

Fund Managers Fund Manager Retail funds Wholesale funds Private Equity Retail funds Private fund Securities Licensee Wealth advisors

MALAYSIA (SC) LABUAN

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Public Fund – General Structure

Fund Manager** Public Fund Custodian/ Trustee Fund Administrator Trust, Foundation, company, LP

• r LLP

Constituent document registered with LFSA ** A Labuan registered public fund must be managed by a licensed Labuan Fund Manager.

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Private Fund – General Structure

Fund Manager* Private Fund Custodian/ Trustee* Fund Administrator* Trust, Foundation, company, LP

• r LLP

Constituent document lodged with LFSA * For Labuan private fund the appointment of fund manager, custodian and fund administrator is optional.

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Islamic Funds

Fund Manager Labuan mutual Fund Custodian/ Trustee Fund Administrator Trust, Foundation, company, LP

• r LLP

Constituent document register/ lodge with LFSA

* For Labuan Islamic mutual funds, a qualified Shariah advisor needs to be appointed to ensure the fund is Shariah compliance. Shariah Advisor*

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Q&A SESSION

Thank You Thank You

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. The republication, reproduction or commercial use of any part of this presentation

in any manner whatsoever, including electronically, without the prior written permission from Labuan IBFC Inc. is strictly prohibited.

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