Set up a Private Fund in Labuan: Registration Procedure

Businessmen can set up a private fund in Labuan and take advantage of the low tax rates and flexible fund structures available in the jurisdiction. The authorities in Labuan offer the opportunity to invest in a private fund, which can be set up in accordance with the number of investors. Our team of company formation representatives in Labuan can offer an in-depth presentation on the characteristics of a private fund.

Quick Facts
Common types of fund vehicles	– corporation, – partnership, – foundation
Private funds with fewer than 50 investors – contribution	The minimum required contribution per investor is RM 250,000.
Private funds with unlimited number of investors – contribution	The minimum required contribution is RM 500,000/ investor.
Multi-currency transactions allowed (YES/NO)	YES
Registering a private fund in Labuan	No formal registration is required, but you must notify the Labuan Financial Services Authority (FSA) and submit an information memorandum.
Components of the information memorandum	– general fund information, – investment strategies, – projected financial results, – redemption policies, – material changes
Submitting the information memorandum	Through a licensed entity, such as: – a trust company, – bank, – investment bank, – fund manager
Accounting records requirements	Must display the fund’s name on all documents.
Tax benefits for private funds	– no taxes on investment holdings, – no withholding tax, – no foreign exchange controls, – no capital gain tax
Islamic private fund – characteristics	A private fund following the same criteria, but also complying with Shariah principles.
Regulatory framework for private funds in Labuan	– Labuan Financial Services and Securities Act 2010, – Labuan Islamic Financial Services and Securities Act 2010
Winding up a private fund	Notify the FSA and appoint an auditor to ensure all assets are returned to investors.
Service providers	You can appoint a fund manager, fund administrator, or other service providers to help manage the fund. Our company incorporation specialists can also take these roles.
Why set up a private fund	– flexible structure, – tax benefits, – investment management, – straightforward establishment process, – local market opportunities, etc.
Assistance from our company formation specialists	Our team can help you set up a trust in Labuan. We can also help you open a Labuan offshore company if you are interested.

Conditions for registering a Labuan private fund

Foreign investors who are interested in opening a company in Malaysia can set up their operations in Labuan through a private fund, also referred to as a mutual fund. In order to open a private fund, the investors will first have to set up a Labuan company. At the same time, the investors can set up the private fund through a corporation, a partnership or a foundation. The mutual funds in Labuan are regulated by the Labuan Financial Services and Securities Act 2010. The local authorities also provide a regulation for the mutual funds established under the Sharia Law, which are regulated by the Labuan Islamic Financial Services and Securities Act 2010. The private fund is a Labuan offshore entity and benefits from plenty tax advantages.

The investment fund can be registered with the purpose of collecting funds in order to perform various investment activities. Investments in Labuan are usually carried out through a private fund, which can perform the following investment objectives:

issue shares;
land purchases;
development projects;
acquisitions.

It is good to know that the private fund does not need to be registered with the Labuan Financial Services Authority (FSA), but a notification in this sense is mandatory. Such funds allow members to invest collectively and exchange the rights involved. Private funds in Labuan offer significant flexibility in terms of their structure and operation. When deciding on investments, the flexibility offered by Labuan’s private funds is often a key factor.

Let our team provide you with complete support if you are a foreign investor looking to incorporate a company in Malaysia, in compliance with the local laws. Our team of company formation agents in Labuan can offer more information on this procedure.

You are invited to watch the video below and find out details about the private funds in Labuan:

Types of private funds in Labuan

The applicable legislation available in Labuan prescribes that the investment funds can be set up as private or public vehicles. Private funds can be further separated into two main categories:

with less than 50 investors, in which the minimum required contribution per investor is set up at RM 250,000;
with any number of investors, whose contribution must be minimum RM 500,000.

We can also give you more information about the Labuan private fund taxes that apply to each type.

The information memorandum

To set up a private fund in Labuan, you must provide a written notification to the FSA. Along with this, an information memorandum must be submitted through a Labuan trust company, a bank, an investment bank, or a fund manager. Our specialists in company formation in Labuancan help you in this process.

This memorandum is designed to help potential investors in evaluating whether they should purchase or subscribe to the private fund. The memorandum must include:

1. General information about the funds – this refers to:

Details about the directors, managers, custodians, and other key personnel of the private fund in Labuan;
All fees and costs that investors will bear;
The fund’s policy on capital and income distribution;
A general overview of the fund (its name, issuance date, legal structure, etc.).

2. The private fund’s investment strategy – which includes:

The policies and objectives of opening a private fund in Labuan;
The names of any underwriters involved in the fund and the amount they are responsible for;
The types of securities the fund intends to invest in;
A clear summary that highlights the main characteristics of the fund;
Information on whether setting up a private fund in Labuan includes investing in more complex financial products like derivatives or unlisted securities;
Any restrictions or limits on the fund’s investments or borrowing activities.

3. Financial results – referring to:

Projections for the expected cash flows and profits of a private fund in Labuan;
The minimum amount of capital the fund expects to raise from investors, after cost deductions;
Policy for submitting financial reports to investors.

Additionally, the private fund in Labuan must also include in the memorandum a redemption policy, which explains how investors can withdraw their investments from the fund.

If there are any significant changes to the information previously disclosed in the memorandum, the fund is required to update it within 30 days. A revised version must then be provided to each investor and the Labuan FSA.

Our specialists in company incorporation in Labuancan explain more about the memorandum and help investors draft it.

The advantages of a private fund in Labuan

There are many advantages to consider when deciding on a private fund in Labuan. This includes no taxes for the investment holding structure, the possibility of working in multi-currencies, and with multi-risk instruments. Moreover, there is no withholding tax imposed and no capital control for a private fund in Labuan. However, any trading income is taxed at 3% (the former RM 20,000 flat-tax option was abolished from YA 2020); this should be considered at the time you intend to open a private fund in Labuan.

What is the investment strategy for a private fund in Labuan?

Opening a private fund means having a solid strategy. The plan should include clear policies on how the fund will invest its capital and how shares in the fund will be priced, among others.

Likewise, the borrowing limitations and the investment of the funds are also part of the strategy created for a private fund in Labuan. On the other hand, knowing the risks through a short analysis might help the investor take the best decision regarding the private fund.

What is the financial forecast of a private fund in Labuan?

Having a predictable cash flow and profits, plus the investment policies of a private fund in Labuan are definitely important.

Information about the fund’s strategy and complete financial reports should be provided at the time a financial forecast for a private fund is prepared. We remind you that our company incorporation agents in Labuan are at your service with ample details about the ways in which you can start a business in Malaysia or create an investment fund in Labuan.

We can give you more details about the financial aspects of the funds, including details about the Labuan private fund taxes.

Statistics about Labuan funds

If you are interested in opening a private fund in Labuan, our team presents you with some relevant statistics from 2025:

there were 45 licensed fund managers and 26 securities licensees;
Most of these fund managers originate from the Asia-Pacific region, with a significant proportion coming from Malaysia and Singapore;
Assets under management of Labuan fund managers rose by 9.4% to USD 1.2 billion.

If you need to open a business in the jurisdiction, we can also help you to open an offshore company in Labuan.

Businessmen interested in further information on the private funds in Labuan are invited to contact our team of company formation consultants in Malaysia.