Labuan Fund Management License in 2026

Labuan fund management license in 2026

• At Tetra Consultants, our team of lawyers, licensing specialists, compliance professionals, and accountants can help you seamlessly get a Labuan fund management license governed under the Labuan Financial Services and Securities Act 2010 (LFSSA 2010), especially Section 40. Our experts will continue to help international clients throughout the licensing procedure, this includes company incorporation, preparation of regulatory documents, draft of internal compliance polices, and submission of the license application to the Labuan FSA. 
• In Labuan, there are two main types of fund management companies: private fund management companies and public fund management companies. Tetra Consultants will advise our international clients on the differences including the minimum paid-up capital, license requirements, and the allowed business activities. Tetra Consultants will ensure that you meet the fund manager requirement in Malaysia and are compliant with the local regulations in Labuan.

Introduction to Labuan fund management license in 2026

• In 2026 as Labuan IBFC has placed itself as a regulated international financial centre, fund managers should showcase strict statutory compliance, operational substance, and fiduciary responsibility. Licensed entities should adhere to regulatory frameworks, this includes the Labuan Financial Services and Securities Act 2010 (LFSSA) especially Section 40, Labuan Business Activity Tax Act 1990 (LBATA), and guidelines issued by the Labuan Financial Services Authority (Labuan FSA).  
• In addition, fund managers operating digital or tokenized investment funds may be subjected to the Digital Financial Services (DFS) framework, which will govern digital asset-related investment activities within Labuan. The Labuan fund manager license holder can provide management services to clients.  
• This may include investment advice and administrative services in respect of securities, including dealing in securities. If your company is planning to undertake Islamic fund management activities, your operations are also required to comply with Shariah principles. 

Advantages of having a Labuan fund management license

Services you can provide:

• Operating under a secure framework  
  • You can operate under a recognized international regulatory framework (LFSSA 2010) administered by the Labuan FSA. 
• Management Services:
  • You can serve as a portfolio manager for your client.
  • You do not require any other licenses such as the money manager license or portfolio management license, unlike that in other countries.
• Investment Advisory Services
  • You can provide advice on investment and securities.
  • You can provide consulting services related to financial planning for clients.
• Administrative Services
  • You can make necessary submissions with respect to securities, on behalf of your client to the Labuan FSA.
  • Issue any required documents.
• Dealing in Securities
  • You can purchase or sell securities on behalf of your clients.
  • You can underwrite the securities as well.

Tax framework under the Labuan IBFC: 

• Labuan fund management companies benefit from a competitive tax regime that is governed by the Labuan Business Activity Tax Act 1990 (LBATA). Under Section 2B of LBATA 1990, qualified Labuan trading entities are subject to 3% corporate tax on audited net profits, considering that the company satisfies the required economic substance requirements in Labuan.  

• Furthermore, Malaysia maintains an extensive double taxation treaty network with more than 70 jurisdictions, enabling fund managers operating from Labuan to structure international investment activities effectively while avoiding double taxation.  

Pre-application requirements for fund management license

Eligibility

According to Labuan International Business and Financial Centre (IBFC), you are required to meet the following fund management requirements in Malaysia to apply for the license:

• An individual who holds a relevant degree or professional qualification to carry on fund management activities. As per the Labuan financial services authority (FSA), the applicant must be at least a diploma holder with three years of relevant experience in the capital market or direct experience in fund management activities.
• An approved fund manager or any provider of such services from a country or jurisdiction who is a member of the International Organisation of Securities Commission (IOSCO); or
• A person who does not fulfil the above requirements may also be considered, provided that the activities are run and managed by suitably qualified and experienced individuals.

Labuan financial services authority (Labuan SFA) requirements

• To secure a Labuan money-broking license, the initial step involves obtaining approval from the Labuan Financial Services Authority (LFSA), based on the business plan, company profile, and other required documents. Subsequently, the official incorporation of the company follows this regulatory clearance. The entity must then submit a comprehensive license application to the LSFA, comprising a three-year business plan with financial projections and marketing strategies. Additionally, the application must include details of all directors and shareholders, the latest two years’ audited accounts for the current corporate entity (if applicable), as well as documents related to Know Your Customer (KYC), Anti-Money Laundering Act (AMLA) compliance, and operational manuals/procedures. 

Requirements for fund management license in 2026

• The Labuan International Business and Financial Centre will evaluate multiple regulatory and operational criteria when assessing applications for a Labuan fund management license in 2026. Minimum paid-up capital of RM300,000 or its equivalent in any foreign currency, which is maintained throughout the company’s operations and is unaffected by operational losses.  

• AUM-linked capital adequacy requirement, where fund managers with Assets Under Management (AUM) exceeding RM150 million must maintain additional regulatory capital equivalent to 0.2% of the AUM exceeding RM150 million, in accordance with Labuan regulatory guidelines. 

• Registered office in Labuan, where the business entity will conduct its core business and operational activities.  

• Comprehensive internal polices and operational processes that cover compliance management, corporate governance, internal controls, risk management, and business continuity planning. Our team of compliance experts will review these policies to ensure ongoing regulatory compliance.  

• Professional Indemnity Insurance (PII) with a minimum coverage of RM1 million, ensuring protection against operational risks, fiduciary liabilities, and professional claims. 

• Minimum corporate structure consisting of at least one shareholder, two directors, and three local employees, with all relevant personnel meeting the Fit and Proper Person Requirements issued by the Labuan FSA.  

• Ability to conduct business transactions in foreign currencies, except for Malaysian Ringgit, unless specifically permitted under the Labuan Companies Act 1990. 

• Display of the company’s name and license or registration number on official documents, including letterheads, business correspondence, and corporate stationery. 

• Appointment of a qualified Shariah advisor or Shariah Advisory Board member for entities intending to conduct Islamic fund management activities, in compliance with the Directive on Islamic Financial Businesses. 

• Segregated trust accounts for client funds, ensuring proper safeguarding of investor assets 

• Compliance with the Day+1 rule, whereby client monies received for public investment funds must be deposited into the designated trust account by the next business day to maintain investor protection and financial transparency. 

• Appointment of an approved auditor to conduct annual financial audits in accordance with the Labuan Financial Services and Securities Act 2010 and applicable Labuan regulatory provisions. 

• Maintenance of proper accounting records and financial documentation in Labuan, in line with the Directive on Accounts and Record-Keeping Requirements issued by the Labuan FSA. 

Type of fund management company and additional requirements

Private fund management company

• Fund managers wanting to manage digital asset funds, tokenized securities, or cryptocurrency investment portfolios should ensure compliance with the Labuan Digital Financial Services (DFS) framework, which regulates digital financial intermediaries and investment service providers operating within the Labuan IBFC ecosystem.  
• If you are managing your own company funds, you can set up a private fund management company. For this Labuan private limited company, you are not required to apply for any fund management license in Labuan. Tetra Consultants will assist you to prepare an information memorandum to the Financial Services Authority of Labuan (FSA) stating the nature of your business activity.
• Registration of the company and submission of the information memorandum will be completed within 3 weeks. Labuan Financial Services Authority usually approves the information memorandum within 10 working days.
• Thereafter, Tetra Consultants will assist our international clients to open a Malaysian corporate bank account. On average, we secure a banking solution within four weeks. See our corporate bank account opening webpage for more information on how to open such accounts. 
• To meet the new economic substance requirements, Tetra Consultants will assist you to look for a local office and hiring 2 local employees. Every month, you will be required to pay the landlord and employees directly. This is to ensure your private fund management company stays compliant with local regulations. 
• All in all, you can expect to start operations within 9 weeks after engaging Tetra Consultants.

Public fund management company

• If you are managing customer funds, you are required to apply for a Labuan fund management license from the Financial Services Authority of Labuan. Tetra Consultants will assist you to secure the fund management license after registering the company and opening a local corporate bank account.
• Our team of experts will prepare a comprehensive business plan including shareholding structure, intended business activities, customers, and suppliers as well as financial projections over the next few years. In addition, we will prepare AML/CFT documentation (policies, procedures, risk assessment, and training records). 
• Tetra Consultants will ensure that you meet the new economic substance requirements in Labuan, which requires the company to have a local Labuan office, 2 Labuan employees, and a paid-up capital of RM300,000. The license application will take approximately around 2 to 3 months.
• All in all, our international clients can expect to start operations within 5 months after engaging Tetra Consultants.

Application process