Services: Characteristics of Labuan Foundations

Labuan Foundation

Characteristics of Labuan Foundations:

  • No minimum capital is required to be maintained.
  • Exists "in perpetuity" as there are no period rules stipulated in the Labuan Foundations Act 2010 and this provides continuity of the foundation at the discretion of the Founder.
  • All aspects of the foundation is kept confidential except for the charter.
  • There is no statutory requirement for an audit unless ordered by the Court.
  • A foundation established in another jurisdiction can be legally re-domiciled to Labuan and vice versa, provided that the other corresponding jurisdiction permits.
  • A Labuan Foundation is protected from foreign claims and cannot be forcefully liquidated to satisfy other obligations such as claims arising from divorce, lawsuit or creditors.
  • Council members do not owe fiduciary duty to beneficiaries and hence, this eliminates competing beneficiaries interests.
  • All Labuan Foundations are expected to carry on business in any currency other than the Malaysian currency except as permitted by relevant authorities.
  • It provides reserve powers to the founder, providing the founder more control compared to a settlor of a trust. Additionally, since a founder may also be a council member, the founder may further direct and manage the foundation's assets.
  • As the Foundation is a separate legal and corporate entity, all liabilities remain corporate liabilities of the foundation.
  • Officers, council members, supervisory person and the Foundation's secretary benefit from statutory indemnification for liabilities incurred by the foundation unless such liabilities arise from personal negligence or if there is proof of bad faith on the part of such officer.
  • Confidentiality provisions restrict the officer, council member, supervisory person and secretary from disclosing any information relating to the foundation unless otherwise required or provided for by law, the court or the charter.
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