Labuan, Malaysia (Securities License)

GENERAL INFORMATION

Under Part IV of the Labuan Financial Services and Securities Act 2010, securities licensees can engage in the following activities:

• Investment Advisory: Provide investment advice or administration services in securities for investment purposes.

• Dealing in Securities: Buy, sell, or engage in transactions involving securities.

• Other Activities: As specified by Labuan FSA.

PRIOR EXPERIENCE REQUIREMENTS

Experience:

• Directors: Must have relevant qualifications (degree or professional certification) and experience in capital markets, securities trading, or related financial services. Alternatively, a diploma holder with a minimum of three years of experience in capital markets or securities-related activities is acceptable.

• Shareholders: Shareholders should demonstrate financial capability and commitment to the business. If they lack direct experience, the company must be managed by suitably qualified individuals.

Track Record:

• Directors and shareholders must provide evidence of their involvement in financial services, securities trading, or investment advisory roles, along with regulatory approvals (if applicable).

• A history of compliance with financial regulations in their jurisdiction is essential.

Commitment:

• Applicants must submit a business plan detailing objectives, services offered, market focus, financial projections, and compliance measures.

• The company must ensure adherence to regulatory and corporate governance standards set by Labuan FSA.

REPORTING OBLIGATIONS

• Annual Audited Financial Statements must be submitted to the Supervision and Enforcement Department within six (6) months of the financial year-end.

• Compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations is required.

• Ongoing submission of statistical data and reports requested by Labuan FSA.

REGULATORY MEETINGS

• Regular compliance and supervisory meetings with Labuan FSA to ensure adherence to regulations.

• Licensees must notify Labuan FSA of any material changes, such as alterations in the business plan, shareholders, or governance structure.

LOCAL STAFF REQUIREMENTS

• The company must maintain a registered office in Labuan.

• Local personnel should be appointed for operational functions, including compliance and administrative duties.

APPLICATION FOR SECURITIES LICENSE

Incorporation & Licensing Timeline:

• The application process typically includes document submission, regulatory review, and approval by Labuan FSA.

• The incorporation of a Labuan company is required before applying for a license.

• The total timeline may range from 2 to 4 months, depending on regulatory approvals.

Minimum Paid-Up Capital:

• A minimum paid-up capital of RM150,000 (or equivalent in foreign currency) is required, which must be maintained throughout operations.

• Additional capital may be required based on the risk profile and business complexity.

COMPANY STRUCTURE

Shareholders:

• Can be individuals or corporate entities.

• Subject to Labuan FSA’s fit and proper criteria.

• Changes in shareholding structure require prior Labuan FSA approval.

Directors:

• Must meet fit and proper person requirements.

• Prior approval from Labuan FSA is required for appointment or replacement.

OFFICE

• A registered office in Labuan is mandatory.

• A marketing office may be set up in Kuala Lumpur or Johor Bahru with prior approval from Labuan FSA.

CONFIDENTIALITY

• The company must comply with Labuan FSA’s confidentiality and data protection regulations.

• Client information must be handled securely and disclosed only under regulatory requirements.

OTHER REGULATORY REQUIREMENTS

Secretary/Resident Agent:

• A Labuan-licensed trust company must be appointed as the corporate secretary or resident agent.

Registered Office:

• The company must maintain a registered office in Labuan for official correspondence and regulatory communication.

Key Staff:

• A Principal Officer with relevant experience must be appointed.

• Internal compliance, risk management, and financial officers must be designated to ensure adherence to regulatory guidelines.

BANK ACCOUNT OPENING

• A corporate bank account in Labuan or another approved jurisdiction is required for business operations.

• Compliance with AML/CFT guidelines and bank due diligence processes is mandatory.

TAXATION AND EXPENDITURE

• Labuan securities licensees are subject to Labuan’s tax regime, which provides:

  • 3% tax on net profits for trading activities (if audited financial statements are submitted).

  • 0% tax for companies engaging in non-trading activities.

• Licensees must also pay an annual fee of RM5,000, due by 15 January each year.