Obtain a Fund Manager License in Labuan

The fund manager is the one responsible for the implementation of the investment strategy for the fund, for managing the portfolio and the trading activities. In Labuan, a distinctive type of fund managers are those who specialize in Islamic fund management, who are required to comply with Sharia law. In this article, our team presents the main steps that apply in the case of those who want to obtain a fund manager license in Labuan.

Investors who are interested in Labuan company formation for the purpose of establishing a mutual fund should be well informed on the requirements for these funds, including their managers.

The fund manager who provides certain investment services in Labuan is required to obtain a license, according to the guidelines issued by the Labuan Financial Services Authority (FSA).

At the same time, the fund managers in Labuan also have to comply with a set of requirements stating their expertise in the field and our team of consultants in company formation in Labuan can offer an in-depth presentation on these aspects. 

What is a fund manager in Labuan? 

According to the applicable legislation in Labuan, a fund manager represents a person who provides investment services, which can be related to investment advice or administrative aspects for investment purposes. They can also provide their services on securities matters. These individuals are required to comply with the requirements set forth by the Financial Services Authority in Labuan.

The two main legislative documents with which a fund manager complies with are the Labuan Financial Services and Securities Act and the Labuan Islamic Financial Services and Securities Act, as required according to the type of fund managed by the individual in question.

Our agents specializing in Labuan trust company and Labuan fund creation can provide more details on the governing laws. It is recommended to seek professional advice as any individual who fails to comply with the Guidelines is punishable under two sections of the Labuan Financial Services Authority Act 1996.

Who is eligible to become a fund manager?  

Entrepreneurs who wish to open a company in Labuan, Malaysia, ought to know that an individual can obtain a fund manager license in the following conditions: 

1. the person must have a degree or a qualification in investment-related activities;
2. the person has been approved for fund management in a country whose regulator is a member of the International Organization of Securities Commissions;
3. if the above-mentioned criteria are not met, the individual can still obtain a fund manager license, as long as he or she can prove a certain experience in the field.

According to the provisions of the Guidelines, an individual needs to have at least three years’ relevant experience in the capital market or direct experience with fund management activities. More details on this subject are available in the presentation below: 

Legal structures under which a fund manager can carry management activities

In the section above, our consultants have presented some of the professional requirements individuals who want to obtain a fund manager license in Labuan must satisfy. Besides these, it must be noted that the law imposes these individuals to be organized under a legal entity in order to carry out management services for investment funds.

Thus, fund managers can set up a company in Labuan as one of the following:

1. limited liability partnership;
2. protected cell company (PPC);
3. limited company.

What activities can a fund manager undertake in Labuan?

The following list includes the activities a licensed fund manager in Labuan can undertake. Investors who wish to open a company in Labuan and apply for a fund manager license afterward can reach out to our agents for complete information about these qualifications.

1. management activities – related to managing the portfolio for the clients as well as their discretionary accounts;
2. investment advice – submitting investment recommendations based on analysis and offering consultancy to clients;
3. administrative services – making the necessary submission to the Labuan Financial Services Authority and issuing documents;
4. dealing with securities – manage the sale and purchase of securities, those that are and that are not listed on a stock exchange or market.

The fund manager in Labuan is required to perform these activities with careful consideration for the client as well as by ensuring the use of an efficient risk management plan. He is the one responsible for setting out the extent of the financial requirements so that the business remains operational in relation to the fund management strategies.

A Labuan offshore company that is incorporated for the purpose of fund management, most often mutual fund management, can provide these services by bringing experienced fund managers into the team.

What are the operational requirements the fund manager must observe?

The fund manager is also required to observe a set of operational requirements:

• capital – maintain the paid-up capital at a value of at least 300,000 RM or its equivalent in another foreign currency;
• insurance policy – it must have a coverage of no less than 1 million RM or the equivalent in another foreign currency;
• compliance – make sure that the shareholders, directors, principal officer, and representative meet the requirements of the Labuan Financial Services Authority for a fit and proper individual;
• internal policies – establish and maintain adequate internal policies and procedures for the fund management operations, internal controls, and risk management.

The fund manager is required to obtain prior approvals from the Authority for the purpose of changing the place of business in Labuan or outside Labuan, for management and shareholding changes as well as for the appointment of directors and shareholders.

Receive the fund manager license 

Persons who want to receive a fund manager license in Labuan should apply at the Labuan FSA, by submitting an application form (Form LSCM), along with other relevant documents required when completing the Form LSCM. 

The investor should also provide a business plan, detailing the activities carried out under the investment fund or investment company. At the same time, the applicant should provide relevant details on the financial resources and comply with the Guidelines on Fit and Proper Person Requirements. 

Labuan fund managers are required to perform their activities with skill, due diligence, and care. They must act in the client’s interest as well as conduct business activities with integrity. They must also comply with the annual license fee requirements (payable no later than 15th January each year).

Our Labuan company formation agents highlight the fact that, for the purpose of obtaining a Labuan fund manager license, the Authority will evaluate both the applicant (his character, professionalism, and integrity) and the business plan.

How long does it take to obtain a fund manager license in Labuan?

In the case of individuals who want to obtain a fund manager license in Labuan, the timeframe required is around 30 to 45 business days.

Please know that the competent authority charges processing fees, as mentioned above. There are 2 types of fees, namely the annual fee (paid initially as a registration fee) of $3,000 (transitional $1,500 in 2026 for existing licensees) and a marketing office fee of $3,500.

Tax considerations for fund managers in Labuan

Given that a fund manager is organized under a legal entity, the said company must abide by the rules for taxation available here. For this type of activity, there are many tax advantages that are applied under the form of tax exemptions, but fund managers can also benefit from tax deductions. In the list below, our specialists present some of the tax obligations and benefits:

• the company’s profits are charged with a 3% corporate income tax;
• the 50% tax exemption for expat professionals expired after YA 2020;
• expatriate directors were exempt on directors’ fees up to YA 2025;
• the company has access to more than 70 treaties for the avoidance of double taxation.

Company incorporation in Labuan is recommended for this type of activity and others, as the tax law provides exemptions on other types of taxes. For instance, following taxes do not apply: the withholding tax, the import tax, the stamp duty, the capital gains tax, the inheritance tax.

Businessmen interested in finding out more information on how to obtain a Labuan fund manager license are invited to contact our team of company formation specialists, who can assist foreign investors in this process. You may also address us if you are interested in Labuan offshore registration.