Companies

Offshore Companies Act, 1990
Incorporations and administration of Labuan offshore companies are regulated by the Offshore Companies Act, 1990 which was recently amended to enable Malaysians to own offshore companies incorporated in Labuan and for foreign owned offshore companies to invest in Malaysia (subject to certain conditions). The Offshore Companies Act also regulates the registration of foreign offshore companies in Labuan.

Offshore companies are able to engage in any legitimate offshore trading or offshore non-trading activity except for shipping operations. Offshore banking, offshore insurance and insurance related businesses, fund management, company management and trust company business may be carried out subject to licensing under the respective Offshore Act.

Offshore trading includes the provision of professional services, commission agents and general trading. Offshore non-trading activity means holding of investments in securities, stock, shares, loans, deposits and immovable properties by the offshore company in its own name.

Incorporation
The Portcullis TrustNet Group can incorporate a company within 3 days provided the proposed name of the company is available.

Name
Company names must include one of the following words, or an abbreviation thereof:

• Corporation
• Incorporated
• Limited
• Public Limited Company
• Societe Anonyme
• Sociedad Anonima
• Aktiengesellschaft
• Naamloze Vennootschap
• Perseroan Terbatas

It may use "(L)" as part of its name.

An offshore company may also have as part of its name the word "Berhad" or "Bhd" but must then add the word "(L)".

Memorandum and Articles of Association
Memorandum and Articles of Association are provided. The standard form is designed for a straight forward corporate structure. This may be amended after incorporation. Alternatively, special form Memorandum and Articles of Association can be tailored to meet a client's requirements prior to incorporation.

Share Capital
There are no minimum share capital requirements. The share capital may be denominated in any currency except Malaysian Ringgit. Separate classes of shares may be created with differing rights to dividends or otherwise. A minimum of one shareholder is required to establish a company. Shareholder can be individuals or corporations. Shareholders need not be resident.

Directors
Companies require a minimum of one director which may be natural persons or a corporation. Directors need not be resident although a resident Director is recommended to ensure the tax residency of the offshore company.

Secretary
There must be a secretary who is an officer or a corporation of a Labuan Trust Company.

Registered Office
Every company must have a registered office in Labuan which is the office of a Labuan Trust Company where all statutory books of the company must be kept.

Meeting of Members
The Directors of an offshore company may convene meetings of members in such manner and at such time and places within or outside Labuan as the Directors consider necessary or desirable.

Accounts and Audit
In general, audit is optional (however, see Taxation below). However, proper accounts must be maintained as will sufficiently explain the transaction undertaken and the financial position of the company.

Annual Return
An annual return in the prescribed form made up to a date not earlier than 14 days before the date of lodgment is required to be lodged each year and not later than 30 days prior to the anniversary of the date of incorporation of the company.

Taxation
Taxation in Labuan is regulated by the Labuan Offshore Business Activity Act, 1990 and a tax return is required to be filed annually by all offshore and foreign offshore companies in Labuan through a Labuan Trust Company.

Offshore and Foreign Offshore trading companies are subject to tax at either 3% on the net audited profits or elect to pay the lump sum of RM20,000.00 in respect of their offshore business activities.A Statutory Declaration together with the audited accounts, if relevant, have to be submitted together with the tax payment.

An investment holding company will not be subject to tax, but a tax return in the form of a Statutory Declaration will still have to be filed.

Further, the following income is exempt from tax:

• dividend received by, or received from an offshore company;
• distributions received from an offshore trust by the beneficiaries;
• royalties received by a non-resident or another offshore company; and
• interest received from, or by, an offshore company under certain circumstances.

No withholding tax is applicable to the items of income specifically exempt from tax.

Double Taxation Agreements
Malaysia has concluded double taxation agreements with many countries. The terms of the agreements vary from country to country. As a territory of Malaysia, Labuan generally has access to the DTAs concluded by Malaysia subject to specific or general anti-avoidance legislation in contracting countries which excludes Labuan offshore entities from treaty benefits.