What a Labuan fund manager is
Labuan FSA's guidelines define a Labuan fund manager as a person who, for valuable consideration, provides management services. These may include investment advice or administrative services for securities investment, including dealing in securities.
The licence is granted under section 40 of the Labuan Financial Services and Securities Act 2010, or section 45 of the Labuan Islamic Financial Services and Securities Act 2010.
Labuan FSA describes three kinds of capital market licensees in Labuan: fund managers, fund administrators and securities licensees.
What the licence allows
Under the Guidelines on the Establishment of Labuan Fund Manager (2019), a licensed Labuan fund manager may carry out these activities.
Management services, such as portfolio management and managing discretionary accounts, including Labuan private funds.
Investment advice, such as securities analysis and research reports.
Administrative services, such as submissions to Labuan FSA and issuing prospectus-type documents.
Dealing in securities, such as quoting two-way prices and underwriting.
Any other activity that Labuan FSA permits from time to time.
Islamic fund management needs prior approval from Labuan FSA and must follow Shariah principles.
Key requirements in the guidelines
Paid-up capital must be at least RM300,000 or its equivalent in a foreign currency. If assets under management exceed RM150 million, extra capital of 0.2% of the amount above RM150 million is required.
A licensee needs professional indemnity insurance of at least RM1 million and at least two directors.
It must keep a registered office in Labuan and carry on its business in, from or through Labuan. It must submit audited financial statements within six months of its financial year end.
Labuan FSA's FAQ says the minimum eligibility is being a licensed fund management company from a recognised jurisdiction. A company set up by individual fund managers licensed by their home supervisor may also be permitted.
Private funds and public funds
Labuan law sets out two fund types. A private fund is not offered to the general public. It has no more than 50 investors, each with a first investment of at least RM250,000 or the foreign currency equivalent, or any number of investors who each put in at least RM500,000.
A public fund is any mutual fund other than a private fund.
How to check a Labuan fund manager
Labuan FSA's Financial Institutions Directory at labuanfsa.gov.my has a Fund Managers list. Check that the company name matches exactly.
Labuan FSA also publishes a list of licences that were surrendered, revoked or struck off, and a list of unregulated or unauthorised individuals, entities, websites and funds. It advises the public not to deal with entities that are not licensed by Labuan FSA.
A Labuan licence is issued under Labuan law by Labuan FSA. It is a different licence from those the Securities Commission Malaysia (SC) issues. For firms offering capital market services in Malaysia, also check sc.com.my/investment-checker and the SC Investor Alert List. SmartChecker shows register records and reviews for the companies it lists.
Common questions
Who licenses Labuan fund managers? Labuan FSA, under the Labuan Financial Services and Securities Act 2010 or its Islamic counterpart.
Can a Labuan fund manager manage Islamic funds? Yes, with prior approval from Labuan FSA, and the business must follow Shariah principles.
What is the entry amount for a Labuan private fund? Labuan FSA's FAQ sets at least RM250,000 per investor for a fund with up to 50 investors, or at least RM500,000 per investor otherwise.
Where can I see if a fund manager is licensed? Search the Fund Managers list in Labuan FSA's Financial Institutions Directory.