OPPORTUNITIES IN THE NEW FUND MANAGEMENT LANDSCAPE VIA LABUAN by - PowerPoint PPT Presentation

OPPORTUNITIES IN THE NEW FUND MANAGEMENT LANDSCAPE VIA LABUAN by Hiu Chee Fatt Director, Business Development Labuan IBFC Inc. Sdn Bhd

International Tax Landscape In A Nutshell

Labuan International Business And Financial Centre  Off the coast of Sabah, East Malaysia  Federal Territory  About 100,000 population  Common time zone with major cities  Where business meets leisure 3

Connecting Asia’s Economies 70% of Labuan Companies are Asian-based (as at 2014)

Internationally Recognised Group of International Finance Centre Supervisors (GIFCS) Member since 1999 International Organisation of Securities Commissions (IOSCO) Member since 2003 Group of International Insurance Centre Supervisors (GIICS) Member since 1999 International Association of Insurance Supervisors (IAIS) Member since 1998 Islamic Financial Services Board (IFSB) Member since 1998 International Islamic Financial Market (IIFM) Member since 2002 Asia/Pacific Group on Money Laundering (APG) Member since 2000 Labuan IBFC Adheres to OECD’s International Standards and Best Practices

Business Activities Companies Banking Insurance Leasing Trust Cos. (14,201) (54) (50) (203) (380) • Investment • Wholesale banking • Life/general • Aviation • Company holding incorporation • Investment banking • Broking • Shipping • Trading • Company • Loans/deposit • Captives • Heavy administration machinery • Financial guarantees • Re-insurance • Corporate secretarial • Trade finance • Trustee services Wealth Fund Management Management (more than 300) (81) • Business succession • Fund manager • Estate management • Mutual funds • Legacy planning • Securities License Source: Statistics from Labuan FSA’s Annual Report 2017

Why Labuan IBFC? • Developed legal framework with wide array of products and services • Large pool of talents • Same time zone as the rest of Asia • Cost effective • Enable tax substance creation • Tax efficiency with large double tax treaties • Labuan companies accepted for listing on: - National Stock Exchange of Australia - Hong Kong Stock Exchange - Singapore Exchange - NASDAQ Dubai

Labuan Tax Investment 0% holding 3% Trading income Flexibility MYR 20,000 Election for Irrevocable Income Tax Act election 1967

Wide Double Taxation Agreements Network ALBANIA ARGENTINA AUSTRALIA AUSTRIA BAHRAIN BANGLADESH BELGIUM BOSNIA BRUNEI CANADA CHILE CHINA HERZEGOVINA CROATIA CZECH DENMARK EGYPT FIJI FINLAND FRANCE GERMANY HONG KONG HUNGARY INDIA INDONESIA REPUBLIC IRAN IRELAND ITALY JAPAN JORDAN KAZAKHSTAN KOREA KUWAIT KYRGYZ LAOS LEBANON LUXEMBOURG PHILIPPINES MALTA MAURITIUS MONGOLIA MOROCCO MYANMAR NAMIBIA NETHERLANDS NEW NORWAY PAKISTAN PAPUA NEW ZEALAND GUINEA POLAND QATAR ROMANIA RUSSIA SAN SAUDI SEYCHELLES SINGAPORE SPAIN SRI LANKA SUDAN SOUTH ARABIA MARINO AFRICA SWEDEN SWITZERLAND SYRIA THAILAND TURKEY TURKMENISTAN UAE UK USA UZBEKISTAN VENEZUELA VIETNAM

Labuan’s Legislation New Acts introduced in 2010 Existing Acts enhanced in 2010 Labuan Financial Services And Securities Act 2010 Labuan Business Activity Tax Act 1990 Labuan Islamic Financial Services And Securities Act Labuan Financial Services Authority Act 1996 2010 Labuan Foundations Act 2010 Labuan Trusts Act 1996 Labuan Limited Partnerships & Limited Liability Labuan Companies Act 1990 Partnerships Act 2010 10

Fund Management Fund Manager Licence Securities Licence Mutual Funds Protected Cell Company Banking 11

FUND MANAGER LICENCE 12

Fund Manager – Who Can Apply? 1. An individual who holds a relevant degree or professional qualification to carry out fund management activities. 2. Labuan FSA may also consider an applicant with a minimum qualification of diploma holder and 3 years’ relevant experience in capital market or direct experience in capital market or direct experience in fund management activities. 3. An approved fund manager or any provider of such services from a country or jurisdiction who is a member of the International Organization of Securities Commission (IOSCO). 4. A person who does not fulfill the above may also be considered, provided that the fund management business is run and managed by suitably qualified and experienced individuals. 5. Fit and proper. 13

Fund Manager - Requirements 1. Maintain a minimum paid-up capital unimpaired by losses of MYR300,000 equivalent in any foreign currency. 2. Where the Labuan fund manager has Asset Under Management (AUM) of more than MYR150 million, it must maintain additional capital equivalent to 0.2% of the AUM in excess of MYR150 million. 3. Maintain a professional indemnity insurance policy with coverage of not less than MYR1,000,000 or its equivalent in any foreign currency. 4. Have at least 2 directors. 5. Sound and viable 3-year business plan with adequate human resources and continuing financial support. 14

SECURITIES LICENCE 15

Securities Licence – Who Can Apply? 1. An individual who holds a relevant degree or professional qualification to carry out the activities of a securities licensee. 2. Labuan FSA may also consider an applicant with a minimum qualification of diploma holder and 3 years’ relevant experience in capital market or direct experience in capital market or direct experience in permitted activities of a securities licensee. 3. A licensed/approved individual who undertakes such securities licensee services, fund manager or any provider of such services from a relevant regulatory and supervisory Authority or country or jurisdiction who is a member of the International Organization of Securities Commission (IOSCO). 4. A person who does not fulfill the above may also be considered, provided that the securities licensing business is run and managed by suitably qualified and experienced individuals. 16

Securities Licence – Requirements 1. Maintain a minimum paid-up capital unimpaired by losses of MYR150,000 equivalent in any foreign currency. 2. Maintain a professional indemnity insurance policy with coverage of not less than MYR1,000,000 or its equivalent in any foreign currency. 3. Sound and viable 3-year business plan with adequate human resources and continuing financial support for the business. 4. Fit and proper. 17

MUTUAL FUNDS 18

Mutual Funds – Public & Private PRIVATE FUND Initial investment per investor in foreign currency not less than the equivalent of MYR250,000. Limited to 50 investors. or Initial investment per investor in foreign currency not less than the equivalent of MYR500,000. Unlimited investors. PUBLIC FUND Any other fund that is not a private fund, or approved by Ministry of Finance as a public fund. Labuan mutual funds can be structured as a Labuan company, a corporation incorporated under the laws of any recognised country or jurisdiction, who is a member of the International Organization of Securities Commissions (IOSCO), a partnership, a protected cell company, a foundation or a unit trust. 19

Private Fund 1. Labuan private funds, prior to its launching shall notify Labuan FSA by lodging an information memorandum through either one of these licensed entities i.e. Labuan trust company, Labuan bank including Islamic bank, Labuan investment bank including Islamic investment bank or Labuan fund manager. 2. Manager of Labuan private fund only is not required to be licensed. 3. Labuan private funds are not offered to the general public and are owned or held by: 3.1 Not more than 50 investors where the first time investment of each of such investor is not less than MYR250,000 equivalent in any foreign currency; or 3.2 Any number of investors where the first time investment of each such investor is not less than MYR500,000 equivalent in any foreign currency. 20

Public Fund 1. Labuan public funds, prior to its launching shall register its prospectus with Labuan FSA through either one of these licensed entities, i.e. Labuan trust company, Labuan bank including Islamic bank, Labuan investment bank including Islamic investment bank or Labuan fund manager. 2. A public fund registered with any member of IOSCO jurisdiction, need not be registered as a public fund with the Labuan FSA so long as the public fund is administered or managed in Labuan by a Labuan licensed fund administrator, custodian, trustee or fund manager. However, it shall notify Labuan FSA of its operations in Labuan IBFC and lodge a prospectus of the public fund with the Labuan FSA. 3. Must appoint a fund manager and a custodian or trustee that is approved by Labuan FSA. 4. Provide at least half yearly reports to investors. 21

Overview – Regulatory Landscape MALAYSIA (SC) Retail funds Fully regulated Fund Managers Wealth advisors Retail funds Proportionally Wholesale funds Securities Licensee regulated Fund Manager Non Private Equity Private fund regulated LABUAN Not Flexible More Flexible Flexible 22