Interpretation
In this Part, unless the context otherwise requires—
“estate” means any property, whether real or personal, which is committed to the administration or management of a Labuan trust company as executor, administrator, trustee, receiver, committee, guardian or agent;
“Labuan managed trust company” means a person carrying on trust company business where such business is managed by another Labuan trust company pursuant to the provisions of Division 3 of this Part;
“settlor” means—
(a) 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 and described as such within a trust instrument; and
(b) if there is more than one settlor named in the trust instrument, the named settlors must be connected persons;
“trust company business” means—
(a) establishing or using a share transfer office or share registration office;
(b) administering, managing or otherwise dealing with property as an agent, legal personal representative or trustee, whether by servant or agent or otherwise;
(c) maintaining an agent for the purpose of soliciting or procuring business, whether or not the agent is continuously resident in Labuan;
(d) maintaining an office, agency or branch, whether or not that office, agency or branch is also used for any purpose by another entity;
(e) the provision of—
(i) management and accounting services to; or
(ii) directors, secretaries and registered offices for, Labuan companies incorporated or registered under the Labuan Companies Act 1990 and foreign Labuan companies registered under that Act;
(f) incorporating or registering companies under the Labuan Companies Act 1990 and generally acting as a lodging agent for any document required to be lodged by a company or person under that Act; and
(g) providing such other services as may be approved by the Authority from time to time, to or on behalf or any person;
“trust instrument” means an instrument in writing by which a trust is created and includes a unilateral declaration of trust and an instrument varying the terms of the trust.
Licence required to carry on trust company business in Labuan
No person shall carry on or transact or hold himself out as carrying on or transacting any trust company business unless—
(a) the person is incorporated or registered under the Labuan Companies Act 1990 and such person is licensed to do so under this Act; or
(b) the person is licensed as a Labuan managed trust company.
Licensing of trust companies
(1) Subject to section 60, a person incorporated or registered under the Labuan Companies Act 1990 may apply to the Authority, in the specified form, for a licence to carry on trust company business in Labuan.
(2) An applicant may apply to the Authority for a licence under subsection (1) by meeting the following criteria:
(a) the applicant has contributed at least the equivalent in any foreign currency of one hundred and fifty thousand ringgit to the capital or working funds of the Labuan company or foreign Labuan company;
(b) the applicant either—
(i) has obtained, or will obtain a professional indemnity insurance policy with a coverage of not less than one million ringgit or its equivalent in any foreign currency or such other amount or denomination as may be determined by the Authority; or
(ii) has deposited with the Authority security to the value of one hundred thousand ringgit or its equivalent in any foreign currency or such other amount or denomination as may be determined by the Authority;
(c) the applicant is able to meet its obligations, including its liabilities to its shareholders; and
(d) the directors and officers of the applicant who are responsible for the management of the Labuan trust company in Labuan, are fit and proper persons.
(3) A Labuan trust company shall have—
(a) at least two trust officers, one of whom shall be based in Labuan; and
(b) a place of business in Labuan.
Terms and conditions of licence
(1) The Authority may approve the application for a licence as a Labuan trust company subject to such terms and conditions, if any, as it may deem fit.
(2) Every Labuan trust company shall lodge a notice in the specified form with the Authority of—
(a) any change to its place of business in Labuan; and
(b) any change to its trust officers,
within seven days from the effective date of change specified.
(3) Every Labuan trust company shall remain indemnified under a professional indemnity insurance policy with a coverage of not less than one million ringgit or its equivalent in any foreign currency or such other amount as may be determined by the Authority throughout its operation as a Labuan trust company.
(4) No Labuan trust company shall open any office or acquire or establish any subsidiary outside Labuan without the prior written consent of the Authority.
(5) Any person who contravenes subsection (4) commits an offence and shall, on conviction, be liable to a fine not exceeding three million ringgit or to imprisonment for a term not exceeding one year or to both.
Temporary continuation for winding-up
Notwithstanding any provision to the contrary, the Authority may authorise in writing the Labuan trust company to carry on business to such extent and for such duration as he may specify in the authorisation for the purpose only of enabling the Labuan trust company to wind-up its affairs consequent upon the revocation of its licence.
DIVISION 2 — POWERS OF LABUAN TRUST COMPANIES
Disclosure of interests in relation to Labuan trust company
Every Labuan trust company who is in any way, whether directly or indirectly, interested in a contract or proposed contract or in the counterparty to a transaction where it is acting in a fiduciary position whether as a trustee or otherwise, shall, as soon as reasonably practicable, furnish details of its interest to the client concerned and the Authority.
Labuan trust company’s power to act as executor
Where a Labuan trust company is appointed either alone or jointly with any other person as executor in the last will of a testator or in a codicil thereto, regardless of when the will or codicil was made, the Labuan trust company may act as executor and may apply for probate of such will and any codicil thereto, and may do and discharge all the acts and duties of an executor as fully and effectively as any other executor.
Labuan trust company’s power to act as administrator
(1) In any case in which a person may apply for a grant of letters of administration of the estate of a deceased person, whether with or without the will annexed, that person may—
(a) join with a Labuan trust company in an application for a grant of letters of administration of the estate to himself and the Labuan trust company jointly; or
(b) authorise a Labuan trust company to apply for a grant of letters of administration of the estate.
(2) Where administration of an estate, whether with or without the will annexed, is granted to a Labuan trust company either alone or jointly with any other person, the Labuan trust company may do and discharge all acts and duties which belong to the office of an administrator or joint administrator, as the case may be, notwithstanding its incorporation.
Additional powers of a Labuan trust company
A Labuan trust company may be appointed as agent or trustee under any settlement or other instrument creating a trust, or to perform any trust or duty which it is authorised, by this Act or by its memorandum or articles of association or by any instrument under which the Labuan trust company was incorporated, to undertake, and may be so appointed, regardless of when the settlement or instrument creating the trust or imposing the duty was made, and whether as an original trustee, a new trustee or an additional trustee, and may do and discharge all the acts and duties of a trustee as fully and effectively as any other trustee.
Labuan trust company’s power to act as sole trustee
(1) A Labuan trust company may be appointed or continue to act as sole trustee notwithstanding that it is provided by the terms of the instrument creating the trust or any power or otherwise that there shall be more than one trustee to perform the trust.
(2) Notwithstanding subsection (1), a Labuan trust company shall not be appointed or be entitled to act as sole trustee in any case in which the instrument creating the trust or power expressly—
(a) forbids the appointment of a Labuan trust company;
(b) provides that there shall be another trustee in addition to a Labuan trust company; or
(c) provides that a Labuan trust company shall not be appointed to act as sole trustee.
Labuan trust company’s power to act as joint trustee with another
(1) A Labuan trust company may act as trustee, executor or agent together with another Labuan trust company or person if—
(a) the instrument under which it acts so provides;
(b) it is authorised or required to do so by law; or
(c) the Court so orders.
(2) A Labuan trust company shall not be liable for breach of trust or loss resulting from any act or omission of a joint trustee, executor or agent with whom it is acting, unless the Labuan trust company has itself actively participated in, or assented to, such breach of trust.
Delegation to Labuan trust company
(1) It shall be lawful for any executor, administrator, trustee or agent to delegate by deed or in writing to a Labuan trust company either alone or together with any other company or
person, as his attorney, all such trusts and powers as may be lawfully delegated by him.
(2) All acts done by the Labuan trust company as such delegatee shall, as against any person dealing with the Labuan trust company without notice of the revocation of such authority by such executor, administrator, trustee or agent, be valid and effectual notwithstanding such revocation.
DIVISION 3 — LABUAN MANAGED TRUST COMPANIES
Licensing of Labuan managed trust companies
(1) No person may be licensed as a Labuan managed trust company unless it is—
(a) a Labuan company or a foreign Labuan company; or
(b) a foreign company licensed, registered or approved to carry out trust company business in other jurisdictions.
(2) The Authority may grant or refuse to grant a licence to such person as a Labuan managed trust company and impose any terms and conditions on such licence as it deems necessary.
(3) An application for a licence under this Part shall be accompanied by—
(a) submission of a proposed detailed management agreement between the applicant and the Labuan trust company;
(b) submission of a certified copy of the certificate of incorporation or constituent document of the applicant; and
(c) submission of a letter of good standing or such other document of this nature from the relevant authority of the applicant’s home country where applicable.
Terms and conditions of licence as Labuan managed trust company
(1) Prior to commencing business as a Labuan managed trust company, every Labuan managed trust company shall appoint a Labuan trust company as its Labuan managed trust manager to give effect to its trust company business.
(2) Every Labuan managed trust company shall at all times, ensure that the Labuan trust company is and continues to be licensed as a Labuan trust company under this Act.
(3) For the avoidance of doubt, save for sections 61 and 62 and Division 4 of this Part, all the provisions that apply to a Labuan trust company under this Act shall similarly apply to a Labuan managed trust company.
(4) If, subsequent to its appointment as the Labuan managed trust manager of a Labuan managed trust company, the licence of such managed trust manager is revoked under section 168, the managed trust company shall appoint a new managed trust manager within the period of four weeks following the date on which the licence of the managed trust company is revoked, failing which the licence of the managed trust company shall be automatically revoked by the Authority.
DIVISION 4 — LABUAN PRIVATE TRUST COMPANIES
Meaning of “connected persons”
For the purposes of Division 4—
(a) a “private trust” means a trust where each beneficiary of the trust is a connected person in relation to the settlor of the trust;
(b) a person is a connected person in respect of any of the following relationships:
(i) his spouse;
(ii) his descendants and their spouses;
(ii) his parents, including step-parents;
(iv) his grandparents and his spouse’s grandparents;
(v) his parents-in-law, including step-parents-in-law;
(vi) his brother, step-brother, sister, step-sister and their spouses;
(vii) his spouse’s brother, step-brother, sister, step-sister and their spouses and children;
(viii) his parent’s brother, step-brother, sister, step-sister and their spouses;
(ix) children of the brother, step-brother, sister or stepsister of his parents, both present and future, including step-children and their spouses; and
(x) children of his brother, step-brother, sister or stepsister, both present and future, including stepchildren and their spouses;
(c) for any of the relationships specified in paragraph (b) that may be established by affinity or consanguinity, that same relationship may be established by adoption.
Registration as Labuan private trust company
(1) No person may be registered as a Labuan private trust company unless it is—
(a) a Labuan company; or
(b) a foreign Labuan company.
(2) An applicant may apply to the Authority, in the specified form for registration as a Labuan private trust company in Labuan by meeting the following criteria :
(a) it satisfies the Authority that it shall provide the services of a trust company only for a private trust or private trusts created or to be created by or at the direction of a settlor or an individual or individuals who are connected persons to the settlor described in the trust instrument;
(b) submission of a certified copy of the executed trust instrument and any subsequently executed trust instrument;
(c) submission of a letter of undertaking that it shall not carry out any trust company business other than with respect to the private trust or private trusts; and
(d) it shall appoint a Labuan trust company as its agent.
(3) The Authority may refuse to register an applicant as a Labuan private trust company if it has reason to believe that the applicant is likely to carry on business in a manner detrimental to public interest or the interests of the beneficiaries of any private trust with respect to which it provides services.
(4) The Authority may, as it deems necessary, impose, vary or revoke any terms or conditions on any registration under this Division by specifying it in writing.
Terms and conditions of registration as a Labuan private trust company
(1) A Labuan private trust company shall, at all times, ensure that—
(a) it complies with paragraph 74(2)(a); and
(b) its agent is a Labuan trust company licensed under this Part.
(2) Subject to subsection (3), a Labuan private trust company shall not be registered under this Division during any period in which it is in contravention of subsection (1).
(3) If, subsequent to its appointment as the agent of a Labuan private trust company, the licence of the agent is revoked, subsection (2) does not apply and the Labuan private trust company shall continue to be registered for the period of thirty days following the date on which the licence of the agent is revoked.
Duties of agent of Labuan private trust company
(1) A Labuan trust company shall not act as the agent of a Labuan private trust company unless it has taken all reasonable steps to satisfy itself that the Labuan private trust company—
(a) complies with paragraph 74(2)(a); or
(b) where the Labuan private trust company is not at that time carrying on private trust business, that the Labuan private trust company will, on commencing its private trust business, comply with paragraph 74(2)(a).
(2) The agent of a Labuan private trust company shall on a periodic basis take all reasonable steps to satisfy itself that the Labuan private trust company continues to comply with paragraph 74(2)(a).
(3) The frequency with which the agent reviews the compliance of a Labuan private trust company with paragraph 74(2)(a) shall be determined by the agent on the basis of its assessment of the risk that the Labuan private trust company may fail to comply with that section.
(4) The agent shall take all reasonable steps to ensure that the most recent copies of the following records with respect to each Labuan private trust company for which it acts as agent are kept at its office in Labuan at all times:
(a) the trust instrument and any deed or document varying the terms of the trust, for each relevant trust; and
(b) the documentation and other information on which it has relied to satisfy itself that the Labuan private trust company complies with paragraph 74(2)(a).
(5) If at any time the agent of a Labuan private trust company forms the opinion that the Labuan private trust company does not comply with paragraph 74(2)(a), it shall immediately notify the Authority in writing of its opinion.
Powers of the Authority
(1) Notwithstanding anything to the contrary in any trust instrument, where the Authority is satisfied that in the interest of a private trust it is necessary for all or any of the trusts for which the Labuan private trust company is acting as trustee to be transferred to a new trustee for administration by such trustee, the Authority may petition the court for that purpose.
(2) Whenever the Authority takes action pursuant to subsection (1), the court may, after hearing representations from the Authority or any other person appearing to the court to be affected, order the transfer of any such trust to a new trustee, and may make such supplemental or incidental orders or give such directions as the court thinks fit.
(3) Without prejudice to any provision under any written law, the Authority shall have the locus standi or legal right to appear, institute and conduct proceedings pursuant to subsection (1).
(4) The Authority may claim the legal costs incurred in the exercise of its powers under subsection (1) from the relevant person or Labuan private trust company, as the case may be.
Non-application of the provisions of this Part
The provisions of Divisions 1, 2, 3 and 5 of this Part shall not apply to Labuan private trust companies unless otherwise provided under this Part.
DIVISION 5 — MISCELLANEOUS
Labuan trust company subject to same control as any other executor
Where a Labuan trust company has been appointed as executor, administrator, trustee, agent or attorney, it shall be subject in all respects to the same control and to removal or restraint from acting, and generally to the jurisdiction of the court, in the same manner as any other executor, administrator, trustee, agent or attorney.
Affidavit of officer
In all cases in which a Labuan trust company is required or authorised to make any affidavit, declaration or statement, it may do so by any of its officers appointed for the purpose.
Examination of books and accounts of a Labuan trust company
(1) Any person who—
(a) satisfies the Court that he has an interest under any trust which is for the time being under the control or management of a Labuan trust company; and
(b) objects to an act or decision of the Labuan trust company on the basis that there was some irregularity or impropriety by the Labuan trust company in doing that act or making that decision,
may apply to the Court to have such entries in the books and accounts of the Labuan trust company as are related to that act or decision examined.
(2) Where the Court receives an application under subsection (1), it may appoint an auditor to examine such entries in the books and accounts of the Labuan trust company and the auditor shall report his findings to the Court.
(3) Where it is established by the findings of the auditor that there has been an irregularity or impropriety by the Labuan trust company, the Court may make such order as it thinks fit.
(4) For the purposes of this section, an auditor shall not include any internal auditor of the Labuan trust company.
Retention of records
(1) A Labuan trust company shall maintain any record as may be required to be kept under this Act for a period of not less than six years from the date an account has been closed or the transaction has been completed or terminated.
(2) Any Labuan trust company which contravenes subsection
(1) commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both.
Money paid to a Labuan trust company to be held in trust
(1) Any money, property or other valuable consideration paid or given to or held by a Labuan trust company in a fiduciary capacity shall always be kept separate from those of the Labuan trust company, and shall be so marked in the books of the Labuan trust company relating to each particular trust as always to be distinguished from any other in the registers and other books of account kept by the Labuan trust company, so that at no time shall such monies, property or other valuable consideration form part of or be mixed with the general assets of the Labuan trust company, and all investments made by the company as trustee shall be so designated that the trusts to which the investments belong can be readily identified at any time.
(2) Any Labuan trust company which fails to comply with the requirement of subsection (1) and every officer of that Labuan trust company who is in default commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both.
Commission, fees, charges and expenses levied by a Labuan trust company
(1) A Labuan trust company shall be entitled—
(a) where it holds an estate on behalf of any person, to receive out of the estate a commission, in addition to all monies properly expended by the Labuan trust company and fees payable to it and chargeable against the estate; and
(b) in all other cases, to levy fees, charges and expenses in respect of any work performed by the Labuan trust company for or on behalf of any person.
(2) Where the Court is of the opinion that any commission, fees, charges or expenses levied in respect of any estate or in respect of any work performed by the Labuan trust company are excessive, the Court may, on the application of any person, on whose behalf the estate is held, or on whose behalf the work was performed, review that commission, fees, charges or expenses, and may reduce it as it thinks fit.
(3) The commission, fees, charges or expenses which a Labuan trust company is entitled to receive under this section shall not in any way be affected or diminished by the fact that any other person may be entitled to a commission, fees, charges or expenses in respect of the work performed.
(4) A Labuan trust company shall have the right to share the commission, fee, charges or expenses to which it is entitled under this section with any other person.
Translation of accounts and records
Where any accounts or other records required to be kept under this Act are not kept in the national or English language, the directors of the Labuan trust company shall cause a true translation of such accounts and records to be made from time to time at intervals of not more than seven days and shall cause such translations to be kept with the original accounts and records.
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).
