Labuan, Malaysia (Investment Banking)

GENERAL INFORMATION

A Labuan Investment Banking License holder is authorized to:

• Provide credit facilities.

• Offer consultancy and advisory services related to corporate and investment matters, including dealing in securities and managing investments on behalf of clients.

• Conduct foreign exchange and stock market transactions (as a principal/market maker), engage in interest rate swaps, deal in derivative instruments or other risk management activities.

• Provide trading platforms for client transactions (e.g., MT4/MT5).

• Underwrite securities

• With additional permission from the LFSA - to operate in spot exchange and custody of virtual assets (Bitcoin, USDT, others) and to provide derivative instruments based on the virtual currencies

• Provide PAMM/MAM/LAMM services

• Provide escrow services

• With additional permission from the LFSA - to operate as a money remittance counterparty

PRIOR EXPERIENCE REQUIREMENTS

Applicants must submit detailed information on the following:

• Experience: Shareholders (corporate entities only) and directors must possess relevant expertise in managing client funds in forex trading, investment management, securities, financial derivatives, investment or commercial banking, etc. A minimum of three (3), suggested five (5) years of proven experience in the financial industry, regulated by the applicant's home country authority, is required.

• Track Record: Demonstrated financial performance for at least three (3) consecutive years prior to application submission, i.e. shareholders must show that it was profitable for the last 3 years. 

• Commitment: Applicants must show a clear commitment to establishing functional investment banking operations in Labuan, as required by Labuan FSA.

REPORTING OBLIGATIONS

Licensed investment banks must submit audited financial statements annually. Audits must be conducted by Labuan-licensed audit firms. The first submission is due at the end of the licensee’s initial financial year.

• Audit Providers: Both international (e.g., Big 4 firms) and local audit firms are available. Fees vary, with international firms generally charging higher rates.

REGULATORY MEETINGS

During the application process, Labuan Financial Services Authority (LFSA) will require company representatives to attend an in-person interview in Labuan (either face-to-face or via a zoom call). Prior to this meeting:

• We will provide detailed guidelines to help you prepare for LFSA’s questions.

• A local representative from our firm will accompany you to the interview.

LOCAL STAFF REQUIREMENTS

Licensed investment banks must employ at least three (3) full-time local staff in the Labuan office. Recommended roles include:

• Office Manager

• Compliance Manager

• Accounting Staff

Our firm can assist in sourcing qualified local and international professionals to meet these staffing requirements.

APPLICATION FOR INVESTMENT BANKING LICENSE

• Incorporation & Licensing Timeline: 6–12 months (excluding bank account setup).

• Minimum Paid-Up Capital: RM 10,000,000 (approximately USD 2,500,000) or equivalent in another currency.

COMPANY STRUCTURE

• Shareholders: Minimum of one (legal entity only), with proven financial industry experience and 3 years of profitable operations.

• Directors: Minimum of three (natural persons only), subject to nationality/residency restrictions, with financial industry experience.

OFFICE REQUIREMENTS

• A local office must be established after obtaining the license (no specific requirements regarding office size or location).

CONFIDENTIALITY

• Details of beneficial owners, shareholders, and directors are not part of the public record.

OTHER REGULATORY REQUIREMENTS

• Secretary/Resident Agent: Mandatory

• Registered Office: Mandatory

• Key Staff: Branch Manager, Compliance Officer, Accounting Staff

BANK ACCOUNT OPENING

• Estimated timeframe: 3–4 weeks (subject to due diligence, business type, and validity of reference documents).

TAXATION AND EXPENDITURE

• Corporate Tax: 3% of net audited profits annually.

• Other Taxes: 0% on capital gains, withholding tax, and stamp duty for offshore instruments.