Area of
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Labuan Investment Banking
Labuan investment banking is defined as:
  • the business of providing credit facilities
  • the business of providing consultancy and advisory services relating to corporate and investment matters including dealing in securities, or making and managing investments on behalf of any person
  • the business of undertaking foreign exchange transactions, interest rate swaps, dealings in derivative instruments or derivative financial instruments or any other similar risk management activities
  • Labuan Islamic investment banking business
  • Labuan financial business, or
  • such other business as Labuan FSA may specify, with the approval of the Minister of Finance, in any currency (including in Malaysian Ringgit where permitted by the Financial Services Act 2013 or such other relevant law in force).

Labuan investment banks are not allowed to accept deposits.
  • A Labuan investment bank can be set up as a branch or subsidiary and registered or incorporated under the Labuan Companies Act 1990. The application may be accepted from:
    1. An investment bank or group engaging in investment banking activities licensed by the regulatory authority in the country of origin
    2. A licensed bank or an established financial institution or financial service provider supervised by a competent regulatory authority
    3. Any institutions licensed under the Financial Services Act 2013 with prior approval from Bank Negara Malaysia; and
    4. Corporations with the necessary expertise and experience in the financial industry with at least three years of good track record and regulated by an authority in their home country.
  • An applicant is required to submit an application of which the submission should include the following:
    1. A letter of awareness from a competent regulatory authority that supervises the applicant's shareholder/head office.
    2. A letter of guarantee from the applicant's shareholder or an undertaking from the head office.
    3. Business plans inclusive of three years' financial projections of the applicant.
    4. Certified true copy of the Memorandum and Articles of Association of the applicant.
    5. Certified true copy of the resolutions of the board or minutes of the general meeting, which approve the applicant to apply for a licence.
    6. Copy of the audited annual accounts of the applicant's shareholder/head office for the three preceding years.
    7. Applicant's corporate profile, which includes:
      • The name, place and date of establishment of the applicant.
      • The names, addresses, qualifications and experience of the directors and officers responsible for the overall management of the affairs of the applicant.
      • The name and address of each member who holds 10% or more of the voting shares of the applicant.
    8. Declaration by the applicant on the probity of its directors and officers who are responsible for the management of the applicant; and
    9. Any other information relevant to the application.
    • Maintain a physical presence in Labuan.
    • Every director or principal officer (PO) of a Labuan investment bank must be fit and proper persons and shall not be subject of any adverse report from any reliable sources. The appointment of a director or PO of a Labuan investment bank must obtain prior approval from Labuan FSA.
    • Comply with the statutory requirements under the Labuan Financial Services and Securities Act 2010.
    • Comply with the prudential and reporting requirements issued by Labuan FSA.
    • Adhere to any other requirements issued by Labuan FSA from time to time.
    • Meet certain pre-determined criteria, should it prefer to co-locate to any other parts of Malaysia.
  • All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year:
    Type of Fees
    Amount
    Annual Fee
    RM100,000
    USD30,000
    Marketing Office Fee
    RM7,500
    USD2,500
    Co-Located Office Fee
    RM10,000
    USD3,500
Labuan Islamic Investment Banking Window
The setting up of an Islamic investment banking window by a Labuan investment bank under the Labuan Financial Services and Securities Act 2010 does not require a separate licence and there is also no additional licence fee involved. A Labuan investment bank may submit the application for approval with the following documents:

  • Certified true copy of board resolution pertaining to the proposed establishment of an Islamic banking window.
  • Business plan inclusive of three years' financial projections.
  • Information on its own internal Shariah Advisory Board (SAB).
Additional Incentives
Under the Malaysia International Islamic Financial Centre's (MIFC) initiative, the Islamic divisions of Labuan investment banks are given greater flexibility as follows:
  1. Exemption from maintaining physical presence in Labuan. The Islamic divisions of Labuan investment banks may open operations offices anywhere in Malaysia, subject to consideration by Labuan FSA.
  2. No limitation on the staffing and number of operations offices to be opened outside Labuan.
  3. The operations offices are to conduct Islamic financial business in non-Ringgit currencies and deal mainly with non-residents as per Labuan legislation.
Dealings with residents in non-Ringgit transactions are allowed as permitted under the current foreign exchange administration policies.
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