The creation of a Labuan trust is generally for an individual or a settlor to give specific property to a third party to be held for the benefit of others, including charities. The Labuan Trust Act 1996 (LTA) allows the creation of the following types of trust:
There are various types of trusts to be established viz, purpose trusts; charitable trusts which includes the unique ‘advancement of human rights and fundamental freedom; spendthrift or protective trusts and the Labuan Special Trust. There is no requirement for a Trust to be registered with the Regulator.
A Labuan Islamic trust can be established under Section 105 of the Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA) and all the provisions of the Labuan Trusts Act 1996 (LTA) shall apply to a Labuan Islamic trust unless specifically provided. The object, purpose and activity of the Labuan Islamic trust must be in compliance with Shariah principles. The creation of a Shariah-compliant trust is to provide an alternative for a settlor to exercise his rights in creating a trust in accordance with Shariah principles.
The trustee of a Labuan Islamic trust is required to appoint or consult a Shariah adviser to advise on matters relating to the operations of the Labuan Islamic trust to ensure its compliance with Shariah principles.
The vesting of property into a Labuan Islamic trust may be facilitated through hibah or hadiah as guided by the Shariah Resolution of the Shariah Supervisory Council of Labuan FSA on Labuan Islamic Trust issued by Labuan FSA.
A Labuan Private Trust Company (PTC) means a trust in which each beneficiary of the trust is a connected person in relation to the settlor of the trust. A PTC is a Labuan company formed for the specific purpose of acting as trustee for a group of connected persons. In a PTC, the settlor, members of his family or his advisors can be appointed to the Board of Directors. The composition of the Board can be changed from time to time to bring in members of succeeding generations and in this way, involve them in the management of the family affairs.
To register a Labuan private trust company, the first step is to incorporate a Labuan company or a foreign Labuan company. An application for a license to operate a PTC must be submitted to The Authority using the specified form which requires the following: