The Authority and its objectives
(1) There is hereby established a body corporate by the name of “Labuan Offshore Financial Services Authority” with perpetual succession and a common seal, which may sue and be sued in its name and, subject to and for the purposes of this Act, may enter into contracts and may acquire, purchase, take, hold and enjoy movable and immovable property of every description and may convey, assign, surrender, yield up, charge, mortgage, demise, reassign, transfer or otherwise dispose of, or deal with, any movable or immovable property or any interest therein vested in the Authority upon such terms as it deems fit.
(2) The objectives of the Authority are—
(a) to promote and develop Labuan as a centre for offshore financial services;
(b) to develop national objectives, policies and priorities for the orderly development and administration of offshore financial services in Labuan, and to make recommendations to the Minister in respect thereof.
Functions and powers of the Authority
(1) The functions of the Authority shall be—
(a) to administer, enforce, carry out and give effect to the provisions of—
(i) the Offshore Companies Act 1990;
(ii) the Labuan Trust Companies Act 1990;
(iii) the Offshore Banking Act 1990;
(iv) the Offshore Insurance Act 1990; and
(v) any other law relating to offshore financial services in Labuan;
(b) to exercise, discharge and perform such powers, duties and functions under the laws referred to in paragraph (a);
(c) to ensure that offshore financial transactions are conducted in accordance with laws relating to offshore financial services and in accordance with established norms of good and honourable conduct, and to preserve and maintain the good repute of Labuan as a centre for offshore financial services;
(d) to carry out research and commission studies on offshore financial services in Labuan;
(e) to make recommendations for the creation and improvement of any facility likely to enhance the attraction of Labuan as a centre for offshore financial services;
(f) to co-operate with offshore financial institutions and professional and industry associations in Labuan to promote and provide offshore financial services and to foster high standards of offshore financial services in Labuan;
(g) to advise the Minister generally on matters relating to offshore financial services in Labuan.
(2) The Authority shall have power to do all things expedient or reasonably necessary for, or incidental to, the performance of its functions and, in particular, but without prejudice to the generality of the foregoing—
(a) to appoint such agents as it deems fit for the purpose of performing its functions;
(b) to impose fees or any other charges it deems fit for giving effect to any of its functions or powers;
(c) to do such other things as it deems fit to enable it to carry out its functions and powers effectively.
(3) For the avoidance of doubt it is hereby declared that the Authority shall also have the following functions, that is—
(a) to license or register persons carrying on offshore financial services in Labuan;
(b) to regulate and supervise the conduct of offshore financial services in Labuan.
(4) The Authority may, with the written approval of the Minister, establish or participate in any body corporate—
(a) for the purpose of promoting research and training in relation to offshore financial services;
(b) for the purpose of enhancing the development of offshore financial services; or
(c) if such establishment or participation is expedient or reasonably necessary for, or incidental to, the performance of the Authority’s functions provided under this Act.
(5) Notwithstanding any provision to the contrary in any other law relating to offshore financial services, when the Authority is satisfied that it is necessary to do so for the purpose of giving effect to the objectives of the Authority, the Authority may issue directions to an offshore financial institution in respect of all or any of the following matters:
(a) the policy to be followed by the offshore financial institution relating to the conduct of the institution’s business in Labuan;
(b) the supervision and regulation of the offshore financial institution pursuant to the law relating to offshore financial services;
(c) the monetary policy to be given effect to by the offshore financial institution.
(6) Any offshore financial institution who fails to comply with any direction issued under subsection (5) shall be guilty of an offence and shall be liable, on conviction—
(a) in the case of an individual person—
(i) to a fine not exceeding two hundred and fifty thousand ringgit; and
(ii) for a continuing offence, to a fine not exceeding two thousand and five hundred ringgit for every day during which the offence continues after conviction; and
(b) in the case of a body corporate or partnership—
(i) to a fine not exceeding five hundred thousand ringgit; and
(ii) for a continuing offence, to a fine not exceeding five thousand ringgit for every day during which the offence continues after conviction.
Membership of the Authority
(1) The Authority shall consist of the following members who shall be appointed by the Minister:
(a) a Chairman;
(b) the Director General; and
(c) not less than three and not more than seven other persons, two of whom shall be from the public sector.
(2) The members appointed under paragraph (1)(c) shall be from amongst persons who possess relevant experience in financial, commercial or legal matters.
(3) The Director General shall be the chief executive officer of the Authority and shall be entrusted with the day-to-day administration of the Authority.
(4) In the event of the Director General being absent or unable to act due to illness or any other cause, the Chairman shall appoint any member of the Authority to carry out the functions of the Director General.
Tenure of office
Subject to such conditions as may be specified in his instrument of appointment, a member of the Authority shall, unless he sooner resigns or vacates his office or his appointment is sooner revoked, hold office for a term not exceeding three years and is eligible for reappointment.
Resignation and revocation
(1) The appointment of any member may at any time be revoked by the Minister.
(2) A member may at any time resign his office by a written notice addressed to the Minister.
Vacation of office
The office of a member of the Authority shall be vacated—
(a) if he dies;
(b) if he has been convicted of any offence under any law;
(c) if he becomes a bankrupt;
(d) if he is of unsound mind or is otherwise incapable of discharging his duties; or
(e) if he absents himself from three consecutive meetings of the Authority without leave of the Chairman or in the case of the Chairman, without leave of the Minister.
Power of the Minister to give directions and require information
(1) The Minister may, from time to time, give to the Authority directions of a general character not inconsistent with the provisions of this Act and such directions shall be binding on the Authority.
(2) The Minister may, from time to time, require the Authority to furnish the Minister with such returns, accounts and information with respect to the performance of any of its functions under this Act and any other law relating to offshore financial services and the Authority shall comply with such requirement.
Authority to determine its own procedure
Subject to this Act and the approval of the Minister, the Authority shall determine its own procedure.
Authority may invite others to meetings
The Authority may invite any person to attend any meeting or deliberation of the Authority for the purpose of advising it on any matter under discussion, but any person so attending shall have no right to vote at the said meeting or deliberation.
Remuneration or allowance
Members of the Authority or any person invited to attend any meeting or deliberation of the Authority under section 11 may be paid such remuneration or allowance as the Minister may determine.
Common seal
(1) The Authority shall have a common seal and such seal may from time to time be broken, changed, altered and made anew as the Authority thinks fit.
(2) Until a seal is provided by the Authority, a stamp bearing the words “Labuan Offshore Financial Services Authority” may be used and shall be deemed to be the common seal of the Authority.
(3) The common seal shall be kept in the custody of the Chairman or such other person as may be authorized by the Authority, and shall be authenticated by either the Chairman or such authorised person or by any officer authorized by the Chairman in writing; and all deeds, documents and other instruments purporting to be sealed with the said seal, authenticated as aforesaid, shall, until the contrary is proven, be deemed to have been validly executed:
Provided that any document or instrument which, if executed by a person not being a body corporate, would not be required to be under seal may in like manner be executed by the Authority, and any such document or instrument may be executed on behalf of the Authority by any officer or servant of the Authority generally or specially authorized by the Authority in that behalf.
(4) The common seal of the Authority shall be taken judicial notice of for all official purposes.
Delegation of Authority’s function or powers
(1) The Authority may delegate any of its functions or powers to—
(a) any member of the Authority;
(b) any committee established by the Authority; or
(c) any officer or servant of the Authority.
(2) A delegation under this section shall not preclude the Authority itself from performing or exercising at any time any of the functions or powers so delegated.
Authority may establish committees
(1) The Authority may establish such committees as it considers necessary or expedient to assist it in the performance of its functions under this Act.
(2) The Authority may appoint any person to be a member of any committee established under subsection (1).
(3) A committee established under this section may elect any of its members to be chairman and may regulate its own procedure and, in the exercise of its powers under this subsection, such committee shall be subject to and act in accordance with any direction given to the committee by the Authority.
(4) Meetings of a committee established under this section shall be held at such times and places as the chairman of the committee may, subject to subsection (3), determine.
(5) A committee may invite any person, for the purpose of advising it on any matter under discussion, to attend any meeting of the committee but the person so invited shall not be entitled to vote at any such meeting.
(6) Members of a committee or any person invited to attend any meeting of a committee may be paid such allowances and other expenses as the Authority may determine.
(7) A member of a committee shall hold office for such term as may be specified in his letter of appointment and is eligible for reappointment.
(8) The Authority may revoke the appointment of any member of a committee without assigning any reason therefor.
(9) A member of a committee may at any time resign by giving notice in writing to the Chairman of the Authority.
Minutes
(1) The Authority or a committee shall cause minutes of all their meetings to be maintained and kept in proper form.
(2) Any minutes made of meetings of the Authority or a committee, if duly signed, shall, in any legal proceedings, be admissible as prima facie evidence of the facts stated therein and every meeting of the Authority or a committee in respect of the proceedings of which minutes have been so made shall be deemed to have been duly convened and held and all members thereat to have been duly qualified to act.
Disclosure of interest
(1) Any member of the Authority or a committee who has or acquires, directly or indirectly, by himself, or his spouse or children, or his partner or his agent—
(a) any share or interest in any offshore financial institution;
(b) any share or interest—
(i) in any contract made with the Authority;
(ii) in any work done for the Authority; or
(iii) in any company or firm with which the Authority proposes to enter into a contract in respect of any undertaking; or
(c) any beneficial interest in land proposed to be acquired, purchased, leased or otherwise dealt with by the Authority, which he knows to be affected or is likely to be affected by any project, scheme or enterprise approved or proposed to be approved by the Authority,
shall declare the nature and extent of his share or interest to the Authority or the committee, as the case may be.
(2) Subject to subsection (7), the declaration required to be made by a member under subsection (1) shall be made—
(a) in the case of paragraph (1)(a), at the first meeting of the Authority or committee held after he acquires such share or interest;
(b) in the case of paragraphs (1)(b) and (c)—
(i) at a meeting of the Authority or committee at which any question relating to the contract, acquisition, purchase, lease, dealing, project or scheme referred to in those paragraphs is first taken into consideration;
(ii) if the member does not have any such share or interest as is referred to in subparagraph (i) at the date of the meeting mentioned in that subparagraph, at the next such meeting held after he acquires such share or interest; or
(iii) if a member acquires any share or interest in any contract with the Authority after it has been made, at the first meeting held after that member acquires such share or interest.
(3) For the purposes of this section, a general notice given to the other members by a member to the effect that he is a shareholder or director of any specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with or by that company or firm, shall be deemed to be a sufficient declaration of interest in relation to any contract so made.
(4) A notice given under subsection (3) shall be of no effect unless it is given at a meeting of the Authority or the committee, as the case may be, or the member concerned takes reasonable steps to secure that it is brought up and read at the next meeting of the Authority or the committee after it is given.
(5) Every declaration made in pursuance of subsection (1) shall be recorded in the minutes of the meeting at which it was made or read.
(6) No member of the Authority or committee shall—
(a) take part in any deliberation (except by invitation of the Authority or the committee, as the case may be) on any matter affecting any offshore financial institution in which he has any share or interest, whether or not he has declared his share or interest, or in any decision relating thereto or in any matter incidental thereto; or
(b) vote upon any resolution or question relating to any contract, acquisition, purchase, lease, dealing, project or scheme in which he has any share or interest, whether or not he has declared his share or interest, or take part in any deliberation (except by invitation of the Authority or the committee, as the cse may be) or any decision relating thereto or any matter incidental thereto,
and if he does so—
(aa) his vote shall not be counted; and
(bb) he shall not be counted in the quorum present at the meeting of such deliberation, resolution or question.
(7) A member who, before his appointment as a member of the Authority or a committee, has already acquired the share or interest referred to in subsection (1) shall declare the nature and extent of his share or interest to the Authority or committee, as the case may be, immediately upon his appointment by a general notice to be given to the Authority or the committee.
(8) Any member of the Authority or a committee who fails to disclose his share or interest as provided under this section shall be guilty of an offence and shall on conviction be liable to a fine not exceeding two hundred and fifty thousand ringgit or to imprisonment for a term not exceeding five years or to both.
Appointment of officers and servants of the Authority
(1) The Authority may, from time to time, employ persons who shall be paid such remuneration and allowances and shall hold their employment on such other terms and conditions as the Authority may determine.
(2) The Authority may make arrangements for the payment to its officers and servants and their dependants of such retirement benefits, gratuities or other allowances as it may determine.
Establishment of staff welfare fund
18 A. (1) The Authority may, with the written approval of the Minister, out of the funds of the Authority, create and maintain a trust account to be known as the “Labuan Offshore Financial Services Authority Staff Welfare Fund” for the benefits of its officers and employees including their dependants.
(2) The Labuan Offshore Financial Services Authority Staff Welfare Fund shall be utilized for such purposes conducive to the welfare of the officers and employees of the Authority, including their dependants, as may from time to time be provided in trust directions to be issued by the Authority with the approval of the Minister, and such directions may provide for the manner and the procedure for the making of the grant, loans or other payments from such Fund.
Power to grant loans and make advances to its officers and servants
The Authority may grant loans and make advances to its officers and servants on such terms and conditions as the Authority may determine.
Disciplinary committees
(1) The Authority shall have disciplinary authority over all its officers and servants and shall exercise disciplinary control in respect of all such persons in accordance with this Act and any regulations made under section 22.
(2) For the purposes of this section—
(a) there shall be established a disciplinary committee of the Authority in respect of the Director General consisting of—
(i) the Chairman, who shall be the chairman of the committee; and
(ii) at least two members of the Authority, which shall not include the Director General, as shall be determined among the members themselves; and
(b) the Authority may, by notification in the Gazette, establish different disciplinary committees for different categories of officers or servants of the Authority.
(3) The following shall apply to any disciplinary committee established pursuant to paragraph (2)(b):
(a) such committee shall consist of any number of members of the Authority, other than the Chairman of the Authority, or officers of the Authority, or any combination of such members and officers; and
(b) an officer who is a member of a disciplinary committee shall not be lower in rank than any officer or servant over whom the committee of which he is a member has disciplinary authority.
(4) The committee established pursuant to paragraph (2)(b) shall exercise its powers in all matters relating to the discipline of officers and servants placed under its jurisdiction.
(5) In the exercise of its disciplinary functions and powers, a disciplinary committee referred to under subsection (2) shall have the power to take disciplinary action and impose any disciplinary punishment or any combination of two or more disciplinary punishments as may be provided for under any regulations made under section 22.
Appeal against decision of disciplinary committee
(1) A decision of the disciplinary committee under paragraph 20(2)(a) shall be appealable to the Minister.
(2) A decision of the disciplinary committee under paragraph 20(2)(b) shall be appealable to the Disciplinary Appeal Board which shall consist of the following members:
(a) the Chairman of the Authority, who shall be the chairman of the Disciplinary Appeal Board and having a casting vote; and
(b) three members of the Authority, not being members of the disciplinary committee whose decision is the subject matter of the appeal, to be appointed by the chairman of the Disciplinary Appeal Board with the approval of the Authority for the purpose of the appeal.
(3) The Minister or the Disciplinary Appeal Board, as the case may be, may confirm, reverse or vary the decision of the disciplinary committee.
(4) When the Disciplinary Appeal Board considers an appeal under subsection (2), a member of the disciplinary committee against whose decision the appeal is made who is also a member of the Authority shall not be present or in any way participate in any proceedings relating to that appeal.
(5) The decision of the Minister or the Disciplinary Appeal Board under subsection (3) shall be final and conclusive.
Power to make disciplinary regulations
(1) The Authority may, with the approval of the Minister, make such regulations as it deems necessary or expedient to provide for the discipline of the officers and servants of the Authority.
(2) The disciplinary regulations made under this section—
(a) may create disciplinary offences;
(b) may provide for disciplinary punishments as the Authority may deem appropriate, and the punishments may extend to warning, fine, forfeiture of emoluments, a deferment of salary movement, reduction of salary, reduction in rank and dismissal;
(c) shall provide for an opportunity to the person against whom disciplinary proceedings are taken to make representations against the disciplinary charge laid against him before a decision is arrived at by the disciplinary committee except in the following cases:
(i) where an officer or servant of the Authority is dismissed or reduced in rank on the ground of conduct in respect of which a criminal charge has been proved against him;
(ii) where the Authority, on the recommendations of the Minister charged with home affairs, is satisfied that in the interest of the security of the Federation or any part thereof it is not expedient to carry out the requirements of this paragraph; or
(iii) where there has been made against an officer or servant of the Authority any order of detention, supervision, restricted residence, banishment or deportation, or where there has been imposed on such officer or servant of the Authority any form of restriction or supervision by bond or otherwise, under any law relating to the security of the Federation or any part thereof, prevention of crime, preventive detention, restricted residence, banishment, immigration, or protection of women and girls;
(d) may provide for the interdiction with reduced emoluments of an officer or servant of the Authority during the pendency of a criminal proceedings against him or disciplinary proceedings against him with the view to his dismissal or reduction in rank; and
(e) may provide for the suspension without emoluments of an officer or servant of the Authority where the officer or servant has been convicted by any criminal court or where an order of detention or restriction has been made in respect of or imposed on the officer or servant.
Imposition of surcharge
(1) A person who is or was in the employment of the Authority may be surcharged if it appears to the Authority that the person—
(a) has failed to collect money owing to the Authority for the collection of which he is or was responsible;
(b) is or was responsible for any improper payment of money from the Authority or for any payment of money which is not duly approved;
(c) is or was responsible, directly or indirectly, for any deficiency in, or for the destruction of, any money, store or other property of the Authority;
(d) being or having been an accounting officer, fails or has failed to keep proper accounts or records; or
(e) has failed to make any payment, or is or was responsible for any delay in the payment from the Authority, of money to any person to whom such payment is due under any law or under any contract, agreement or arrangement entered into between that person and the Authority.
(2) The Authority shall, before the person is surcharged, serve on him a written notice calling on him to show cause why he should not be surcharged.
(3) If a satisfactory explanation is not received within fourteen days from the date of service of the aforesaid notice, the Authority may—
(a) in the case of paragraphs (1)(a), (b) and (c), surcharge against the person a sum not exceeding the amount not collected, or of the improper payment made, or of the deficiency in or destruction of the property caused; and
(b) in the case of paragraphs (1)(d) and (e), surcharge against the person, such sum as the Authority may think fit.
Notification of surcharge
The Authority shall notify the person surcharged in respect of any surcharge made under subsection 23(3).
Withdrawal of surcharge
Notwithstanding subsection 23(3) and section 24, the Authority may at any time withdraw any surcharge in respect of which a satisfactory explanation has been received or if it otherwise appears that no surcharge should have been made, and the Authority shall forthwith notify the person surcharged of the withdrawal.
Recovery of surcharge
The amount of any surcharge made under subsection 23(3) and not withdrawn under section 25 shall be a debt due to the Authority from the person surcharged and may be sued for and recovered in any court at the suit of the Authority and may also, if the Authority so directs, be recovered by deduction—
(a) from the salary of the person surcharged; or
(b) from the pension of the person surcharged, by equal monthly instalments not exceeding one-fourth of the total monthly salary or pension, as the case may be, of that person.
Composition of the Authority in special cases
In any action for surcharge against the Director General, the composition of the Authority for the purposes of sections 23 to 26 shall not include the Director General.
Public servants
All members of the Authority or any of its committees or any officer, servant or agent of the Authority while discharging their duties as such member, officer, servant or agent shall be deemed to be public servants within the meaning of the Penal Code [Act 574].
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).
