This post is intended to provide a quick and comprehensive understanding of the typical Labuan Company registration process under the Labuan Financial Services Authorities (LFSA), which governs business and company activity in Labuan.
There are a total of ten steps, and without further ado, let’s start at the beginning.
Step 1. Select type of structure
Determine the entity from the following table that best applies to your intended business activities.
| Business Structure | Short Definition |
|---|---|
| Company | This structure is ideal for larger businesses. It offers limited liability, which distinguishes the business’s activities from those of the owners. |
| Partnership | Commonly used by small-scale businesses, involving two or more individuals who agree to share a single business’s profits and responsibilities. |
| Foundation | Primarily for philanthropic purposes, but can also serve as a unique type of business entity, holding assets and conducting business for the benefit of members. |
Permitted business activities
For your information, these activites can take place in conventional, digital, and Syariah formats.
- Banking
- Money Broking
- Wealth Management
- Commodity Trading
- (Re)Insurance and Insurance-Related
- Credit Token and Leasing
- Capital Market
- Investment Holding
Step 2. Hire Labuan business service providers
As these services are tightly regulated by the Labuan Financial Services Authority, only engage those who are on their official lists and have a registration number.
We’ve linked each of the service functions to the corresponding LFSA lists below.
- Labuan Underwriting Manager: They evaluate risks for insurance companies to fix premiums.
- Labuan Insurance Manager: They direct and oversee an insurer’s activities to ensure compliance.
- Labuan Trust Company : They companies provide financial services related to trusts.
- Auditor: They examine financial statements to ensure accuracy and compliance with regulations.
Step 3. Appoint a Company Secretary
The Company Secretary comes from the Labuan Trust Company you engage and will help you incorporate your new Labuan company. All incorporations must be done through a Labuan Trust Company, who will conduct due dilligence as well as advise you on any necessary business licenses.
Step 4. Reserve a company name
If all is well, it costs USD 15 to reserve a name and approval usually comes within 24 hours, after which the name will be held for you for three months.
Your Company Secretary will be able to better advise you once they know your business specifics, but you’re technically free to apply with just about any name. Just bear in mind that Labuan FSA has the final say and can turn it down at their discretion.
Step 5. Labuan company registration / incorporation
This step will be handled by your Labuan Trust Company and Company Secretary, and costs:
- USD 1,500 for a local Labuan company, and
- USD 2,000 for a foreign Labuan company registration
Once the paperwork is in order and gets a thumbs up from Labuan FSA after their due diligence check, your Labuan company can usually be incorporated within 24 hours.
Step 6. Visa application for foreign business owners
The Employment Pass requires joint approval from the Labuan Authorities and Immigration Department and usually takes anywhere from 45 to 60 days, with a processing fee of USD 350.
We won’t get into the many benefits of holding a Labuan Employment Pass, but rest assured they are significant!
To learn more, check out our FAQs on Labuan Offshore Companies.
Step 7. Open a corporate bank account
Different banks will have different Know Your Customer procedures and while your physical presence is not necessary, it usually means a longer due dilligence process. Expect it to take up to four weeks to open your coprate bank account.
Step 8. Business readiness compliance
Again, your Company Secretary and Labuan Trust Company will guide you, but compliance for a Labuan Company boils down to two things:
Economic substance
In Labuan, there are specific economic substance requirements for companies:
- Your company must have a real physical office in Labuan
- A certain number of full-time employees based in Labuan
- Your company must meet a minimum operating expenditure in Labuan
Statutory agencies
These government bodies oversee various aspects of conducting business in Malaysia and have specific requirements companies must follow. Here are just a couple of the most common ones.
- Inland Revenue Board of Malaysia (IRBM): The federal authority overseeing taxation in Malaysia.
- Malaysia Employees Provident Fund (EPF): The national mangement for private sector employee retirement funds.
Depending on the nature of your business, you may need to comply with industry-specific agencies.
Step 9. Begin operations
Nothing much to say here other than congratulations!
Six months later, and it’s time for your kingdom to pay tax.
Step 10. Statutory reporting and tax obligations
For normal companies, audited financial statements must be submitted to LFSA within 9 months from the financial year end, and annual tax returns must be filed with LHDN by 31 March or at any extended period allowed by IRBM for each year of assessment.
We hope this short guide to Labuan Company registration was useful!
Let MISHU handle your Labuan Company registration
MISHU’s team is experienced in helping companies swiftly incorporate their Labuan company. We would be happy to sit down over a virtual cup of coffee and understand your needs, including for specific business licenses and employment passes – so drop us a line!
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