In accordance with the Labuan Companies Act 1990 (LCA 1990), international investors in Labuan can establish various types of companies with the help of a straightforward company formation process and a favorable tax structure.
For more information about the registration process, refer to Labuan company formation.
CHARACTERISTICS OF A LABUAN COMPANY
- It has one resident secretary and one director;
- There is no minimum capital requirement or authorized capital required by law;
- There is no bearer share option available, and the shares have no nominal value.
- The office of the resident secretary, which serves as its registered office, must be located in Labuan;
- Privacy is guaranteed. Third parties are not given access to information concerning the management of the company or its business operations.
- Legal entities may combine.
TYPES OF BUSINESS STRUCTURES IN LABUAN
Labuan International Company (IBC)
An IBC is the most well-liked choice in Labuan for foreign businesses. It receives favourable tax treatment and is meant for conducting business outside of Malaysia. IBCs are exempt from local taxes and have fewer reporting requirements. They are permitted to engage in a range of activities, with the exception of commerce within Malaysia. An IBC must fulfill Labuan Substance Requirements to qualify for tax exemptions.
Private Company Limited by Shares
In this common company structure, ownership shares are created. Due to a private company’s limited liability, the shareholders’ personal assets are protected from the company’s debts. A minimum number of shareholders and directors are required to be present.
Public Company Limited by Shares
A public corporation limited by shares can issue its shares to the general public through a stock exchange, just like a private company limited by shares can. It is subject to more extensive regulatory limits and inspection because of its public nature.
Private Company Limited by Guarantee
This legal form is widely used for nonprofit or charitable purposes. Instead of shareholders, it has members who provide guarantees for a specific amount in the event of winding up. Profits often go back into fulfilling the objectives of the company rather than being distributed to members.
Labuan Limited Partnership
A business entity with two or more partners is known as a Labuan LP.
A Labuan LP must have a minimum of two partners, one general partner and one limited partner, and a maximum of fifty partners.
Partners may be corporations, with the exception of businesses established for the purpose of engaging in professional activity, in which case they must only be made up of natural individuals and be reinforced by professional indemnity insurance coverage provided by an insurer recognized by the Labuan Financial Services Authority.
Labuan Limited Liability Partnership (LLP)
- A Labuan LLP is a type of company made up of two or more partners that collectively run or manage a firm.
- A Labuan LLP is an alternative corporate business structure that combines the advantages of limited liability and flexibility. It has the legal authority to make agreements and possess properties in its own name. A Labuan LLP must have two partners as a minimum.
- A Labuan LLP allows a partner to be protected from being held accountable for partnership obligations caused by the unethical conduct of another partner or individual.
- Members are shielded from personal liability unless they invest a certain amount in a Labuan LLP.
- For taxation purposes, a Labuan LLP is considered a taxable entity. The partners are not required to pay taxes on distributions made from the post-tax profits.
A foreign corporation may establish a branch in Labuan to conduct business operations. The branch is a part of the parent company and is accountable for taxes and specific reporting requirements.
A Labuan trust is not a corporate organization but rather a legal arrangement in which a trustee holds and manages assets for the benefit of beneficiaries. It works as a versatile tool for wealth management, estate planning, and asset protection.
Labuan Protected Cell Companies (PCC)
This can be converted from an existing LC or incorporated as an LC. It is a limited liability company with the capacity to create “cells” of legal entities possesses the capacity to hold investments or assets divided into a variety of classes to meet the various goals of many individual investors while simultaneously maintaining the independence of each cell.
Reach out to us at Relin Consultants for further assistance.