FAQ on Incorporation of Labuan Private Fund
Unsure if Labuan Private Fund is able to meet your objectives to raise funds for your projects? Look no further. This FAQ on Labuan Private Fund is the answers to your most pressing inquiries!
What is Labuan Private Fund?
Labuan Private Fund is a vehicle that enables you to raise fund from private investors to invest in your projects. This fund raising business activity is permissible by Labuan FSA as long as the company is set up as a Private Fund. The fund is to be raised privately because this is not a public fund. All Labuan Private Fund can invite subscribers to invest in their fund, in one of the two criteria below:
1. For Private Fund who opt to have less than 50 investors, the initial minimum investment amount per investor is USD 70,000.
2. For Private Fund who opt to have an unlimited number of investors, the initial minimum investment amount per investor is USD 125,000.
What are the benefits of Labuan Private Fund?
- Without license required, anyone can set up the vehicle.
- The tax rate is only 3% based on the audited report.
- No tax on losses.
- Simple, cost effective and straight forward to operate a private fund.
- There is no requirement to appoint a licensed Fund Manager, custodian, and Trustee to manage the fund.
- No regular reporting to Labuan FSA, unless being asked.
Labuan Private Fund can be registered under Labuan Company, Protected Cells, Limited Partnership. These various type of structure allow you to have different kind of protection or control of the fund. For those who are not sure of the right structure, we can help you to identify the right one for your business objectives.
Most entrepreneurs or start ups, tend to use Labuan Company because it is easy to control and management and compliance are minimal. This is also the best entity should the company is aiming for a public listing on the exchange.
There is no restriction on the kind of projects that you can raise fund for in a Labuan Private Fund entity. In raising fund for a project with a private fund, the subscribers will typically be looking at a reasonable return on their investment at the very least. So whatever projects that you possibly could conceive of that give a good return and attractive to your subscribers, you can set up a private fund for it.
The other examples of projects that are commonly being set up as a private fund is property development projects, fintech, blockchain technologies, AI, etc. as long as the return to the investors is reasonable and it is achievable.
Labuan Private Fund are not allow to do marketing and raise fund in Malaysia except in Labuan. Malaysians who stayed permanently outside Malaysia can subscribe to the fund.
Yes, an individual or corporate entity is permissible to set up Labuan Mutual Fund which can be private or public.
Labuan entities, foreign individuals and corporate. The profit tax will be subjected to the Labuan Business Tax Act of 3% with the audited report.
Not required for Labuan Private Fund but this appointment is applicable to Labuan Public Fund.
Yes, as long as it is certified by the Certified Syariah Advisor.
Yes, it must be done by auditor approved by the Labuan FSA
Yes, as long as you have an operational office in Labuan. The marketing office can be anywhere in Malaysia with an unlimited number of staffs.
Director’s fees are fully tax-exempt for foreign Directors. Managerial posts the expatriate’s employment will enjoy a 50% tax rebate on their salaries. These incentives are applicable up to Year Assessment 2020
Often within 30 to 45 days if there is no query on the details written in the Information Memorandum.
- Filling of Annual Return
- Payment of Annual Fee to Labuan FSA
- Tax filing with your audited report
You need to inform Labuan FSA on your fund status and chose the option you prefer to close your company. The closing can be done either by auto strike off or apply for dissolution.
Send us your inquiry if you wish to discuss how to kick start the Labuan Private Fund, it is easy and straight forward!
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