The first step in forming a Labuan offshore company is to get approval from LOFSA of the required name by using the services of a trust company.[1] The application should indicate why the name is selected and the nature of business to be conducted by the applicant company.

Names are not allowed where, in the opinion of the Registrar, it is undesirable or is a proper name, or includes a name of a kind that the Registrar is not willing to accept for registration.[2] The name shall have any of the following description:[3]

a) The word “Corporation” or the word “Incorporated” or the abbreviation “Corp” or “Inc.”;

b) The word “Limited” or the abbreviation “Ltd.”;

c) The words “Public Limited Company” or the abbreviation “PLC.”;

d) The words “Society Anonyme” or “Sociedad Anonima” or the abbreviation “S.A.”;

e) The words “Aktiengesellschaft” or the abbreviation “A.G.”;

f) The words “Naamloze Vennootschap” or the abbreviation “N.V.”;

g) the words “Perseroan Terbatas” or the abbreviation “P.T.”;

h) In romanised characters, any word or words in the national language of any country which connote a joint stock company limited by shares, or any abbreviation thereof.

Similar procedures and rules apply when a company seeks to change the name of an existing company.

Names in Chinese characters are not registerable. So is a name that ends with LLP as “LLP” refers to Limited Liability Partnership, and similarly as “LLC” refers to “Limited Liability Company”, this is also not registerable. The reason is that the term “LLC” in its popular use refers to a hybrid company which in essence is more a partnership rather than a true company limited by shares.

A Labuan offshore company may include the word “Berhad” or the abbreviation “Bhd.” as part of its name provided it has the word “(L)” as part of its name.[4]

A trust company or any other person may, by subscribing its or his name to a memorandum and complying with the requirements in the registration, form an offshore company.[5] Every offshore company must be a company limited by shares.[6]

Application to incorporate can only be handled by a Labuan trust company who must then submit the Memorandum and Articles of associations with the following details;

i) names of directors and shareholders;

ii) registered address, company secretary and trust company;

iii) size and denomination of share capital;

iv) the nature of business of the company;

v) address of directors, shareholders and secretary;

vi) percentage of shareholding; and

vii) declaration that the requirements of the OCA 1990 in respect to all matters precedent and incidental to the registration have been complied with.

All submissions are made online through the EDSP. No hard copy is required to be filed. Payment for filing fees is made by auto deduction by LOFSA from the trust company’s HSBCnet account. No cheque or cash payment is made to LOFSA.

Due diligence requirement:

Trust companies are “reporting institutions”[7] under the Anti-Money Laundering & Anti-Terrorism Financing Act 2001 or AML/ATF Act. Trust companies therefore are required to know the true identity of the beneficial owners of Labuan offshore companies. This means knowing exactly who they are providing services to and not just knowing their client’s agent or reps.

In the case of individual directors and shareholders, true identity can be established by obtaining copies of passports or identity cards which have been verified by lawyers, accountants, notary public, bankers or company secretaries. In the case of corporate directors and shareholders, the certificates of incorporation must be verified too.

Trust companies are also required to have their own ‘Know Your Customer’ policy or KYC. Such a policy will require them to look at the nature of the client’s business to determine if the business is genuine. The policy may similarly require production of proof of address and a professional or banker’s reference regarding the client and his business. The KYC policy is often an on-going process requiring trust companies to be vigilant not only at the engagement stage but all through the duration of the provision of services to their clients.

Trust companies are required to report suspicious activities to the Financial Intelligent Unit which is under the purview of Bank Negara Malaysia.