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Mutual Fund
A mutual fund or fund means a Labuan company, a corporation incorporated under the laws of any recognised country or jurisdiction, a partnership, a protected cell company, a foundation or a unit trust which:

  • collects and pools funds for the purpose of collective investment with the aim of spreading investment risk; and
  • issues interests in a mutual fund which entitles the holder to redeem his investments that is agreed upon by the parties and receives an amount computed by reference to the value of a proportionate interest in the whole or part of the net assets of the aforesaid types of entities, as the case may be, and includes an umbrella fund whose interests in a mutual fund or units are split into a number of different classes of funds or subfunds and whose participants are entitled to exchange rights in one part for rights in another.

Two types of funds are prescribed under the Labuan Financial Services and Securities Act 2010, namely private funds and public funds.
Application for Licence to Carry on Labuan Securities Licensee and Capital Market Business

Private Fund
Private funds are mutual funds:

  1. whose securities are owned or held by:
    • not more than 50 investors where the first-time investment of each of such investors is not less than RM250,000 or such other sum as may be prescribed by Labuan FSA or the equivalent in any foreign currency; or
    • any number of investors where the first-time investment of each of such investors is not less than RM500,000 or such other sum as may be prescribed by Labuan FSA or the equivalent in any foreign currency; or
  2. which is designated as a private fund under regulations made under the Labuan Financial Services and Securities Act 2010.
Islamic private funds are private funds with similar definition to the above and are in compliance with Shariah principles.
Notification Requirements
A private fund can carry on its affairs by giving notice in writing of its scope and nature of business to Labuan FSA. The notification shall be accompanied with an information memorandum or such other offering document and should be lodged through a Labuan licensed entity. The information memorandum or such other offering document will be deemed as a prospectus and a lodgement fee of RM2,000 (USD600) is applicable.
Public Fund
Labuan public funds are those whose securities are offered for subscription to any members of the general public.
Registration Requirements
No public fund shall carry on business in or from within Labuan unless it has been registered under Section 33(1)(a) of the Labuan Financial Services and Securities Act 2010 (LFSSA) or in the case of an Islamic public fund, Section 38(1)(a) of the Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA). The annual fee payable is RM2,000 (USD600).
Application Requirements
  1. A copy of the Memorandum and Articles of Association / Partnership agreement / trust deed / charter / other constituent documents as the case may be of the fund.
  2. Names, addresses, profiles and relevant experience of the director / general partner / designated partner / trustee / council members of the fund (Board of the public fund), whichever applicable. The appointment of any members of the Board of the public fund requires prior written approval from Labuan FSA.
  3. The profile of the promoter/custodian/trustee/fund manager, whichever applicable.
  4. An audited annual account of the promoter and fund manager, where applicable, for the three years preceding the application.
  5. The profile of the qualified person as its Shariah adviser in the case of a Labuan Islamic public fund.
  6. A signed declaration by the Board of the public fund on confidentiality and secrecy with regard to the operation and administration of the fund.
  7. A certificate from an expert as required under Section 11 of the LFSSA or Section 16 of the LIFSSA that includes a statement certifying that the Labuan public fund complies with the requirements under Part III of LFSSA or Part IV of the LIFSSA and the Guidelines on the Establishment of Labuan Mutual Funds Including Islamic Mutual Funds.
  8. A copy of the prospectus of the Labuan public fund which should comply with Section 35 of the LFSSA or Section 40 of the LIFSSA, either in draft or final form.
Operational Requirements
The applicant fund shall do the following:
  1. Appoint a fund manager, trustee, administrator and custodian (service provider) approved by Labuan FSA.
  2. Ensure that the duties of the fund manager and custodian or trustee of the Labuan public fund are independent from each other. The duties of the fund manager for the public fund are provided under Sections 47, 48, 49 and 50 of the LFSSA and Sections 46, 47, 48 and 49 of the LIFSSA.
  3. Maintain a registered office in Labuan. For a Labuan public fund which is permitted to be managed by a non-Labuan licensed fund manager, at least one of the service providers must be approved by Labuan FSA.
  4. Ensure that all subscriptions are repaid immediately if the minimum level of subscription required is not met within the stipulated time.
  5. Conduct its business with due diligence and sound principles.
  6. Ensure that the shareholder and every members of the Board of the public fund including any other relevant person, are fit and proper persons in accordance with the Guidelines on Fit and Proper Person Requirements issued by Labuan FSA.
  7. Maintain adequate and proper accounting and other records in line with the Directive on Accounts and Record-Keeping Requirement for Labuan Entities issued by Labuan FSA that will sufficiently explain its transaction and financial position and indicate clearly its names and registration number on its letterhead, stationery and other documents.
  8. Appoint an approved auditor to carry out an annual audit of the accounts in respect of the business operations and submit the audit report to the investors and Labuan FSA pursuant to Section 174 of the LFSSA and Section 135 of the LIFSSA within six months after the close of each financial year.
  9. Comply with the requirements of Section 53 of the LFSSA and Section 54 of the LIFSSA with regards to its accounts and audit requirements.
  10. Provide half yearly reporting to the investors, which includes (but not limited to) the following:
    • Portfolio valuation report showing actual portfolio mix of the fund;
    • The net asset value of the investment;
    • Independent verification/confirmation of existence of the fund’s assets; and
    • Other pertinent information to the investor with regard to the fund’s performance.
  11. Notify Labuan FSA of any amendment or alteration to any of its constituent document within 30 days of the changes being effected including its business plan.
  12. Obtain approval from Labuan FSA for any change to the members of the Board of the public fund.
  13. Ensure fair and orderly winding down of the matured fund including having an auditor to ensure that all assets have been properly returned to investors.
  14. Comply with the relevant laws and regulations of the jurisdictions where it intends to operate including obtaining the necessary approval.
  15. Ensure compliance with the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 and Guidelines on Anti-Money Laundering and Counter Financing of Terrorism which is relevant to Labuan IBFC.
  16. Ensure proper policies and procedures are in place to ensure a sound compliance framework that safeguards clients’ interests.
Fees
All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year. If any of the mutual funds uses a protected cell company (PCC) structure, the annual fee would be as follows:
Type of Fees 
AMOUNT
Annual Fee 
RM2,000 
USD600
PCC Structure
AMOUNT
Core
RM5,000 
USD1,500
Each Cell
RM2,000 
USD600
Governing Legislation
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