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    Introduction to Labuan Securities License in 2026

    • At Tetra Consultants, our team of lawyers, licensing specialists, compliance professionals, and accountants will assist you in seamlessly obtaining a Labuan Securities License in 2026. We provide end-to-end support including Labuan company incorporation, preparation and submission of the LSCM application form, regulatory compliance advisory, and post-licensing operational support, ensuring your business meets all requirements set by the Labuan Financial Services Authority (Labuan FSA). 
    • The Labuan Securities License, established by the Labuan Financial Services Authority (FSA) and effective from 1 January 2014, is an arrangement provided to an individual or company engaging in providing investment advice or administrative service on securities. Operations of the Islamic securities licensee shall adhere to Shariah precepts and rulings.  
    • Unlike a Labuan fund manager, a securities licensee is not authorized to hold any money or assets for clients. The financial sector in Labuan is governed by the Labuan Financial Services and Securities Act 2010, which administers banking, money broking, financial business, insurance, and leasing activities.  
    • Any investor who intends to conduct any business in the investment market of Labuan must apply for and be approved to have a securities license. The Labuan jurisdiction has demonstrated a friendly tax environment, with an effective registration process to make it attractive to foreign investors. Our team can help you with securing securities licenses and guides on how to register company in Labuan quickly and hassle-free. 

    Qualifying eligibility for Labuan Securities License as of 2026

    • The eligibility for a Labuan Securities License is primarily focused on the qualifications of individuals involved in the management of the licensee, including directors, shareholders, and UBOs, ensuring that the company is run by competent and experienced personnel. 

    Degree or skilled qualification:

    • Any degree or skilled qualification in fund management. However, the Labuan FSA may consider applicants possessing a diploma in any discipline and having relevant experience of at least three years in capital markets or direct fund management activities. 

    International certification:

    • An associate or approved fund manager from a jurisdiction or country, a member of the International Organization of Securities Commissions. 

    Experience based eligibility:

    • A person who does not fit within the above two categories may still be eligible, if fund management activities are in fact carried out and managed by highly qualified and experienced persons. 

    Regulatory Authority for Labuan Securities License as of 2026

    • The License is regulated by the Labuan Financial Services Authority, known as Labuan FSA. It is established under the Labuan Financial Services and Securities Act 2010, LFSSA. This act lays down the groundwork for the legal framework supporting the securities industry in the Labuan International Business and Financial Centre, Labuan IBFC. It includes all financial services, such as banking, insurance, and securities activities. Furthermore, the regulatory framework governing Labuan securities activities has been strengthened through Act A1654 – Labuan Financial Services and Securities (Amendment) Act 2022, which updated the Labuan Financial Services and Securities Act 2010 (LFSSA) in order to showcase modern financial services standards. For Islamic securities activities, Act A1655 – Labuan Islamic Financial Services and Securities (Amendment) Act 2022 provides the corresponding Shariah-compliant regulatory framework. 

    Some of the key regulations include: 

    Labuan Financial Services and Securities Act 2010 (LFSSA): 

    • This act gives the legal basis for the licensing and regulation of financial services in Labuan, including relevant securities activities. 

    Guidelines on the Establishment of Labuan Securities Licensee:  

    • These are guidelines issued by the Labuan FSA, setting out the requirements to be satisfied before the grant of a securities license. They deal with such matters as the qualifications of the applicant and operational and compliance obligations in general, with specific provisions for Islamic securities licensees pertaining to the application of Shariah precept principles. 

    Anti-Money Laundering and Anti-Terrorism Financing Act 2001:  

    • Licensees are to act in a way to comply with this Act, which makes it imperative that the licensee, within their operational framework, embed measures against money laundering and financing of terrorism. 

    Regulatory requirements for businesses to obtain Labuan Securities License as of 2026

    • At least 1 shareholder without residency requirements. 
    • At least 2 local personnel as employees of the company. 
    • At least 1 local company secretary. 
    • Under the Economic Substance Requirements (ESR) and Section 2B(1)(b) of the Labuan Business Activity Tax Act (LBATA), it is mandatory for a company to maintain a minimum annual operating expenditure of RM100,000 in Labuan to demonstrate genuine business presence and qualify for the Labuan tax regime. 
    • The company must maintain a registered office in Labuan. 
    • The minimum paid-up capital required is RM150,000 (approximately US$35,000). 
    • Companies are required to have a professional indemnity insurance policy with a minimum coverage of RM1million (RM 1,000,000) to protect against potential liabilities arising from their business activities. 

    Permitted activities under Labuan Securities License in 2026

    • Investment advisory, entities can provide professional investment advice on securities based on clients’ financial objectives and risk appetite. This includes conducting securities analysis, issuing research reports, recommending portfolio strategies, and offering advisory services related to corporate finance planning and investment decision-making. 
    • Administrative services, licensees can offer administrative and regulatory support to clients in relation to securities activities, including preparing and submitting documentation to the Labuan FSA, assisting with regulatory filings, preparing prospectuses, and ensuring that reporting obligations comply with the applicable regulatory framework. 
    • Dealing in securities, entities are allowed to arrange the purchase or sale of securities on behalf of clients, including issuing two-way quotes for securities not listed on a stock exchange. Licensees may also sponsor securities issuance and assist with underwriting placements, subject to compliance with Labuan FSA regulations. 

    Economic substance requirements for Labuan Securities License as of 2026

    • In order to maintain the preferential Labuan tax regime, securities licensees should adhere to Economic Substance Requirements (ESR) under the Labuan Business Activity Tax Act (LBATA). These requirements ensure that Labuan business entities are conducting genuine economic activities within the jurisdiction.  
    • The main substance requirements consists of: 
      • Minimum 2 full-time employees based in Labuan  
      • Minimum annual operating expenditure of RM100,000 
      • Maintenance of a registered office in Labuan  
      • Operational management and decision-making conducted within Labuan  
    • Failure to adhere with these requirements may lead to an entity being taxed under the Malaysia Income Tax Act 1967 instead of the preferential Labuan tax regime. 

    Advantages of obtaining Labuan Securities License

    Tax benefits 

    • Labuan provides an attractive tax regime for licensed entities; this includes a corporate tax rate of 3% on audited net profits under the Labuan Business Activity Tax Act. Companies can also take advantage of no withholding tax, stamp duty, capital gains tax, or inheritance tax. Qualified expatriate professionals may get a 50% personal income tax reduction; this improves the attractiveness of jurisdictions for international businesses.  

    Market access and credibility 

    • A Labuan Securities license improves the credibility of a business and enables companies to operate within the Labuan International Business and Financial Centre (Labuan IBFC). Being licensed by the Labuan Financial Services Authority (Labuan FSA) improves investor confidence while offering a strategic gateway to local and global markets.  

    Streamlined operations 

    • Holding a Labuan Securities license enables companies to legally conduct securities related activities in a well-defined regulatory framework. This further helps businesses to operate effectively while also ensuring compliance with Labuan FSA regulations and focusing on their core investment and advisory activities. 

    Regulatory oversight 

    • Licensed entities that operate under the supervision of Labuan Financial Services Authority (Labuan FSA), ensuring adhere to the established regulatory standards and international best practices. This regulatory oversight further promotes transparency, improves governance, and improves trust among investors and stakeholders.  

    Timeline and cost required to obtain Labuan Securities License in 2026

    • The time required to obtain a Labuan license typically ranges around 6-7 months, depending on the completeness of the submitted documents. This would involve the steps of incorporating a local company in 2 weeks after which we will be submitting an application to the Labuan Financial Services Authority together with detailed business information, legal compliance documents, and other data which may be called for. After this, our team will also assist in opening a corporate bank account which takes around 4 weeks after the company is well incorporated.  
    • The overall cost of getting a Labuan Securities License differs on the basis of scope of services required. Our all-inclusive external user engagement fee covers every aspect from the initial company formation to the license application, including any additional fees that may arise during the process. We will conduct thorough consultations to provide a detailed breakdown of the total engagement fee before commencing registration. However it is to be noted that the Labuan Securities License annual government fee is payable to the Labuan FSA each year in order to maintain the validity of the license. On the basis of ongoing regulatory developments, the licensing fee structure may be subjected to revision in 2027 and 2028 as part of the Labuan’s IBFC regulatory modernization framework that is aimed at improving the financial services ecosystem of the jurisdiction. 

    Procedure to obtain Labuan Securities License in 2026

    Step 1: Deciding on to the legal structure 

    • Initially, our experts will assist you to register company in Labuan within 2 weeks, with a recommendation to incorporate an International Business Company (IBC). Our legal team and licensing specialists will guide you on selecting the most suitable corporate structure to support your Labuan Securities License application. 

    Step 2: Fulfill company requirements 

    • To obtain a Securities License we will set up a Labuan company with at least two directors without residency requirements and appoint 2 key personnel relevant to the investment adviser, fund manager, or securities company licensed in this sector and having all their necessary qualifications.  

    Step 3: Application and document preparation

    • Our licensing specialists will prepare and submit the LSCM Form, the official application form required by Labuan FSA, together with a detailed business plan outlining the proposed securities activities, target markets, governance structure, and compliance framework. We also attach compliance under Anti-Money Laundering and Anti-Terrorism Financing Act. The application will include business particulars, the Labuan business address, confirmation of compliance with the Anti-Money Laundering and Anti-Terrorism Financing Act, and any other documents needed by Labuan FSA. 

    Step 4: Comply with financial requirements

    • Tetra Consultants will ensure compliance with all financial requirements for the license, this includes maintaining the minimum paid-up capital at RM150,000 or approximately US$35,000, or its equivalent in any foreign currency which must remain unimpaired by losses throughout the operational period. Additionally, we will assist you in purchasing professional indemnity insurance too. 

    Step 5: Comply with operational requirements

    • Additionally, we will establish an operational office in Labuan, with at least two local personnel as employees of the company and help implement policies for corporate governance, risk management, and compliance to ensure sound standards of operation. 
    • Labuan licensed entities must comply with Economic Substance Requirements (ESR) under Section 2B(1)(b) of the Labuan Business Activity Tax Act (LBATA). These rules require licensed entities to showcase sufficient operational presence, including local employees as well as operating expenditures in Labuan. 

    Step 6: Submission of the application

    • All completed application forms and supporting documents will be submitted to the Labuan FSA. We will also provide a soft copy for your review to ensure the application meets the necessary requirements before final submission. 

    Step 7: Compliance and maintenance

    • Upon receiving the Labuan Securities License, our team will ensure ongoing compliance including annual audits, regulatory updates to the Labuan FSA and tax registration support.  
    • Under the Labuan Business Activity Tax Act, Licensed companies are considered Labuan Trading Companies and are taxed at 3% on audited net profits. Companies must meet the requirements regarding substance in order to continue enjoying this preferential tax rate. We will help you through these regulations and ensure that you not only comply but also optimize your tax position. 

    Step 8: Corporate bank account opening 

    • Once your business is registered, we will proceed with a corporate bank account opening which usually takes about 4 weeks after incorporation. 

    Taxation system for Labuan Securities License as of 2026

    • The taxation system is governed by the Labuan Business Activity Tax Act 1990 (LBATA), which oversees the imposition, assessment, and collection of taxes on business activities conducted in, from, or through Labuan. 
      • Labuan Business Activities: Entities carrying out business activities in Labuan are taxed under LBATA, which provides a favorable tax regime for licensed business operations. To continue benefiting from the 3% corporate tax regime, Labuan entities must comply with the Economic Substance Requirements (ESR) including maintaining RM100,000 annual operating expenditure and local employees. 
      • Non-Labuan Business Activities: If a Labuan entity engages in activities outside of Labuan, it falls under the Malaysian Income Tax Act 1967 (ITA), which subjects it to Malaysian tax regulations. 

    Taxation policy for Labuan Securities License in 2026

    Corporate tax rate: 

    • A Labuan Securities License sets the company on the very attractive taxation policy ground, which includes a corporate tax rate of only 3% on audited consolidated net profits. The rate is notably low compared with most other jurisdictions, making Labuan quite an attractive choice to conduct business in. It reduces the tax burden, hence making Labuan more attractive as a financial hub and makes it easier for companies to gain a competitive edge in managing their tax liabilities. 

    No Withholding Tax: 

    • The Labuan taxation policy is very conducive, with no withholding tax on dividends, interest, or royalties. In other words, it accommodates easier and more cost-effective repatriation of profits, thereby facilitating the transfer of funds to the shareholders or for reinvestment without additional tax charges. This very favorable condition greatly enhances Labuan’s appeal as a financial center by reducing the overall tax impact on profit distribution and financial transactions. 

    Exemptions from other taxes: 

    • Wide-ranging tax exemptions are available to licensees in Labuan. These include nil stamp duty, import duty, sales tax, capital gains tax, or inheritance tax. This significantly reduces the effective tax liability for a business and makes Labuan one of the most attractive locations for financial activities. 

    Labuan Marketing Office (LMO)

    • A Labuan Marketing Office (LMO) enables Labuan licensed entities to easily establish a satellite presence in Kuala Lumpur or Johor Bahru for marketing and client communication purposes. While the main licensed activities should remain in Labuan, an LMO enables businesses to: 
      • Meet clients in the mainland Malaysia  
      • Promote Labuan licensed financial services 
      • Conduct marketing and manage their business relationships  
    • Tetra Consultants will let you know the annual fee for an LMO and help you get the approval from the Labuan FSA before starting the operations.  

    Looking to obtain Labuan Securities License in 2026

    • Tetra Consultants works as your advisor and trusted partner in your business expansion and securities dealer license application. With our own team of lawyers, licensing specialists, compliance team, and accountants, we tell our clients what they need to know, instead of what they want to hear. Most importantly, we are known for being a one-stop solution for our valued clients.   

    FAQ

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