Short title
s 1
This Act may be cited as the Labuan Offshore Trusts Act 1996.
Labuan Offshores Trusts Act 1996 Part I — Preliminary
Interpretation
s 2
(1) In this Act, unless the context otherwise requires— “Authority” has the meaning assigned thereto by the Labuan Offshore Financial Services Authority Act 1996 [Act 545]; “beneficiary” means a person entitled to benefit under a trust or in whose favour a discretion to distribute property held in trust may be exercised; “breach of trust” means— (a) any act by a trustee which is in contravention of the duties imposed; (b) any act or neglect by a trustee which is not authorized or excused; or (c) any neglect or omission on the part of the trustee to fulfill the duties imposed upon him, by this Act, the proper law of the trust or the terms of the trust; “corporation” means a body corporate, wherever formed or incorporated; “Court” means the High Court or a judge thereof; “immovable property situated in Malaysia” includes shares, stocks or debentures in or of a company whose assets includes immovable property situated in Malaysia other than a public company quoted on the official list of a stock exchange of any country or jurisdiction therein; “Labuan” means the Federal Territory of Labuan; “Malaysia” means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the territorial waters, and includes any area extending beyond the limits of the territorial waters of Malaysia, and the sea-bed and subsoil of any such area, which has been or may hereafter be designated under the laws of Malaysia and in accordance with international law as an area over which Malaysia has sovereign rights for the purposes of exploring and exploiting the natural resources, whether living or non-living; “Minister” means the Minister for the time being charged with the responsibility for offshore companies; “minor” means a person who has not attained the age of majority under the proper law of a trust or, where no law has been chosen, the law of his domicile; “offshore trust” has the meaning assigned to it by subsection 7(1); “person” includes a body of persons, corporate or unincorporate; “prescribed” means prescribed by or under this Act or any regulation made under this Act; “proper law” means— (a) the law chosen by the settlor to be applicable to a trust, the choice being expressed or implied in the terms of the trust; or (b) where no law is chosen, the law with which a trust is most closely connected at the time of its creation; “property” means any movable or immovable property, and includes rights and interests, whether present or future and whether vested or contingent; “qualified person” means a person who is not a resident of Malaysia; “register” includes any kind of record; “registered offshore trust” means an offshore trust registered under subsection 12(4); “resident” means any person— (a) who is a citizen or permanent resident of Malaysia; or (b) who has established a place of business and is operating in Malaysia, other than an offshore company or a foreign offshore company incorporated or registered under the Offshore Companies Act 1990 [Act 441], and includes a person who is declared to be a resident pursuant to section 43 of the Exchange Control Act 1953 [Act 17]; “settlor” means a person who makes a trust and includes a person who provides trust property or makes a testamentary disposition on trust or to a trust, but does not include a person who contributes to a unit trust; “terms of the trust” means the written or oral terms of a trust or any other terms applicable under its proper law; “trust” includes the trust property and the rights, powers, duties, interests, relationships and obligations under a trust; “trust company” means a company registered under section 4 of the Labuan Trust Companies Act 1990 [Act 442] to carry on business as a trust company; “trust instrument” means an instrument by which a trust is created and includes a unilateral declaration of trust and any instrument varying the terms of the trust; “trust property” means the property for the time being held on trust; “trustee” means a person appointed to act as a trustee of a trust in accordance with the provisions of this Act; “unilateral declaration of trust” has the meaning assigned to it by section 8; “unit trust” means any trust established for the purpose, or having the effect, of providing facilities for the participation by persons as beneficiaries under the trust in any profits or income arising from the acquisition, holding, management or disposal of any property. (2) For the purpose of the definition of “proper law” in subsection (1), in ascertaining the law with which a trust is most closely connected, reference shall be made, in particular, to— (a) the place of administration of the trust designated by the settlor; (b) the situs of the trust property; (c) the place of residence or business of the trustee; and (d) the objects of the trust and the places where they are to be fulfilled. (3) Any reference in this Act to “this Act” shall, unless otherwise expressly stated, be deemed to include a reference to any regulation, rule, order, notification or other subsidiary legislation made under this Act. (4) Words and expressions used in this Act with reference to any other law shall, so far as necessary to give effect to this Act and consistently with the provisions thereof, have the same meaning as they have in the law with reference to which they are used in this Act.
Existence of a trust
s 3
A trust exists where a person holds or has vested in him or is deemed to hold or have vested in him property of which he is not the owner in his own right and is under an obligation as a trustee to deal with that property— (a) for the benefit of any beneficiary, whether or not ascertained or in existence; (b) for any purpose which is not for the benefit of the trustee; or (c) for both such benefit and purpose mentioned in paragraphs (a) and (b).
Charitable and purpose trusts
s 4
(1) A trust shall be regarded as a trust for charitable purpose under this Act where the trust is made for any one or more of the following purposes and where the fulfilment of such purpose or purposes is for the benefit of the community or a substantial section of the community having regard to the type and nature of the purpose or purposes: (a) the relief or eradication of poverty; (b) the advancement of education; (c) the promotion of art, science and religion; (d) the protection of the environment; (e) the advancement of human rights and fundamental freedom; or (f) any other purposes which are beneficial to the community. (2) A purpose may be regarded as charitable whether it is to be carried out in Malaysia or elsewhere and whether it is beneficial to the community in Malaysia or elsewhere. (3) Notwithstanding any law to the contrary, a trust may be created or established for a particular purpose or purposes, whether charitable or not, but the trust must vest in natural persons within the perpetuity period applying or expressed to apply to the trust, and any trust so created or established shall be enforceable by the settlor or his personal representatives or by the person or persons named in the instrument creating or establishing the trust as the person or persons appointed to enforce the trust and the trust shall be enforceable at the instance of the person or persons so named notwithstanding that such person or persons are not beneficiaries under the trust.
Spendthrift or protective trust
s 5
(1) The terms of a trust may make the interest of a beneficiary in the trust property or in any income or capital of such property— (a) liable to termination; (b) subject to a restriction on alienation or disposal; or (c) subject to diminution or termination in the event of the beneficiary becoming insolvent or any of his property becoming liable to seizure or to sequestration for the benefit of his creditors. (2) A trust under which the interest of a beneficiary is subject to termination, restriction or diminution under subsection (1) is a spendthrift or protective trust. (3) A provision in the terms of a trust requiring the interest of a beneficiary in the trust property or in any income or capital of such property to be held upon a spendthrift or protective trust shall be construed as a requirement that the interest of the beneficiary be subjected to termination, restriction or diminution as mentioned in subsection (1).
Proper law of a trust and power to change proper law
s 6
(1) Subject to the provisions of this Act, a trust shall be governed by its proper law and shall be interpreted and enforced accordingly. (2) The terms of a trust may provide for the proper law of the trust to be changed from the laws of one jurisdiction to the laws of another jurisdiction and vice versa, subject to the provisions of this Act and to the recognition of such a change by the relevant laws of the other jurisdiction, in particular as regards the validity of the trust and the interests of the beneficiaries. (3) A change in the proper law shall not affect the legality of, or render any person liable for, anything done before the change.
Back to Labuan Offshores Trusts Act 1996 — full text
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
Text as at 1 January 2006 (LOM reprint); amendments made after that date may not be incorporated. Read the official text ↗
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).
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