Private & Islamic Foundation

  • A corporate body with a separate legal entity from its managers (i.e. its officers and its council);
  • Usually established to hold assets with the objective of managing the assets for the benefit of a class of persons on a contractual basis.
  • It is typically used for:

  • Labuan Foundation can be registered for either Charitable or Non-Charitable purposes as long as permitted by the Charter and Articles.
Labuan Islamic Foundation

  • Can be established under Section 107 of the LIFSSA and all the provisions of the LFA shall apply to the Labuan Islamic foundation unless specifically provided.
  • The object, purpose and activity of the Labuan Islamic foundation must be Shariah compliant.
  • Appoint a Shariah adviser for Shariah compliance.
  • Ensure the legal transfer of the property ownership from the founder to the foundation.
  • Property endowment into the Labuan Islamic foundation is done using hibah or hadiah.
Licensing  Requirements

Appoint a Labuan Trust company as company secretary to register a Labuan Foundation or Labuan Islamic Foundation as per the Labuan Foundations Act 2010 (“LFA”) and Labuan Financial Services and Securities (Amendment) Act 2022 (“LIFSSA”)

Operational Requirements

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Each foundation setup time varies depending on the complexity of the Founder’s wishes and needs.

Advantages / Benefits of a Labuan Foundation

  • Founder can be an individual or a corporation
  • Cost-effective setup and maintenance compared to a Trust
  • Flexible lifespan of the foundation : can be perpetual or a fixed period of your choice
  • Founder is protected from foreign claims and the foundation cannot be forcefully liquidated to satisfy claims arising from divorce, lawsuit or creditors after 2 years (as per Section 61 of the LFA)
  • Founder has full control and decision-making power over the Foundation’s structure, management, assets, and beneficiaries, which can be changed anytime through.
  • Legal ownership of the assets remains within the control of the foundation
  • It is a legal entity fully protected by the LFA without the need to refer to other jurisdiction’s law
  • Recognized as a corporate entity with the ability to enter contracts and conduct lawful transactions
  • Permissible to own and hold worldwide assets, including Malaysian assets
  • Full confidentiality as no information can be accessed by the public
  • Option to redomicile to another jurisdiction at any time

Comparison between Foundation & Trust