Transcript Labuan Offshore

Using Labuan as an Offshore
Centre - The Benefits to
Singapore & Asean
Businesses
LEE SWEE SENG
Advocate & Solicitor
LLB. LLM, MBA
Certified Mediator, Notary Public
Patent and Trademark Agent
[email protected]
www.leesweeseng.com
©copyright
Legislations
Offshore Banking Act 1990
Offshore Companies Act 1990
Offshore Insurance Act 1990
Labuan Offshore Business Activity Tax
Act 1990
Labuan Trust Companies Act 1990
Labuan Offshore Trusts Act 1996 (LOTA)
Legislations
Lembaga Pembangunan Labuan Act
1992
Labuan Offshore Financial Services
Authority Act 1996
Labuan Offshore Limited Partnerships
Act 1997
Labuan Offshore Securities Industry Act
1998
Perbadanan Labuan Act 2001
Topics:
Trust
Inheritance
Limited Partnership
Intellectual Property
Trust – Reasons for creating one
Tax Planning - mitigating taxes, either
entirely or by way of deferral. In some
jurisdictions the scope for tax planning may
be
limited,
in
other
jurisdictions
opportunities remain.
Trust – Reasons for creating one
Estate Planning - Wealthy individual will
normally wish to provide income for his
spouse, education for his children and also
make gifts to charities and perhaps for
other public purposes. While a will can
achieve some of these objectives, a trust
involving the legal transfer of ownership of
assets to trustees with defined objectives as
to how and for whose benefit the assets are
to be held and administered is probably the
ideal medium.
Trust – Reasons for creating one
Estate Planning - Some countries may be
governed by laws which dictate how assets
are to pass to relatives at death, ie ‘forced
heirship’. A trust can be a useful way of
overcoming forced heirship rules.
Avoiding disruption on death – With several
properties in several countries mean several
probates need to be obtained in the various
jurisdiction.
Trust – Reasons for creating one
Protecting certain beneficiaries – providing
the needs of individual who are minors or
those who suffer from mental or other
disabilities
Protection from potential creditors – driven
by widespread litigation in the USA, with
huge awards of damages sometimes
handed down by juries in civil cases, trust
has been used to provide protection from
future creditors.
Trust - LOTA – Creation of trust :
s8
Must be created by a will or other
instrument in writing including a unilateral
declaration of trust .
Statingthat it is the trustee of an offshore trust;
name of the trust;
terms of the trust; and
names or information enabling the identification
of all the beneficiaries.
Trust - LOTA– Criteria : s 7
the settlor must not be a resident of
Malaysia;
trust property does not include any
immovable property situated in Malaysia;
beneficiaries under the trust must not be
a resident of Malaysia at the time the
trust is created;
at least one of the trustees is a trust
company.
Trust – Various Trusts
Purpose Trust
Charitable Trust
Protective Trust
Spendthrift Trust
Trust - LOTA – Various Trusts : s
4
Purpose / Charitable Trust
Where the trust is made for the benefit of
the community or a substantial section of
the community such as the relief or
eradication of poverty; advancement of
education; promotion of art, science and
religion; protection of environment;
advancement of human rights and
fundamental freedom
Trust - LOTA – Various Trusts : s
5
Spendthrift / Protective Trust
Where the trust made in which the interest
of a beneficiary is subject to termination,
restriction or diminution in the event the
beneficiary becoming insolvent or any of
his property becoming liable to seizure or
to sequestration for the benefit of his
creditors.
Trust - LOTA – Unenforceability
of Judgment : ss 9 & 10
An offshore trust, validly created shall be
recognized and enforceable in accordance
with its terms
the Court shall not vary it or set it aside or
recognize the validity of any claim against
the trust property pursuant to the law of
another jurisdiction or the order of a court
of another jurisdiction
Trust - LOTA – Fraudulent
disposition : s 11
Where claiming creditor can prove beyond
reasonable doubt that:
offshore trust was created with principal
intent to defraud that creditor; and
at the time such creation, registration or
disposition took place, render the settlor,
insolvent or without property by which that
creditor’s claim could have been satisfied
Trust - LOTA – Fraudulent
disposition : s 11
Disposition not fraudulent as against creditor if
creation or disposition of property:
took place before the creditor’s cause of action
accrued or had arisen;
took place after the expiration of two years from the
date the creditor’s cause of action accrued; or
took place before the expiration of 2 years from the
date, which the creditor’s cause of action accrued
but he fails to commence such action before
expiration of one year from the date of such
creation, disposition or registration.
Trust - LOTA – Registration : s 12
Offshore trust whether validly created in
Labuan or abroad, may be registered with
the Authority. Statement to contain name
of offshore trust; date of creation; name
and address of trust company acting as
trustee; address of registered office of the
offshore trust and proper law of the
offshore trust.
Trust - LOTA – Secrecy : s 15
All documents filed with or kept by the
Authority in relation to offshore trusts shall
not be open to the public for inspection,
and the Authority shall not disclose to any
person any such documents or any
information which may have come to its
knowledge in the performance of its duties
under this Act
Trust - LOTA – Anti-Money
Laundering Act 2001 (AMLA)
Reporting institutions, (as defined in Schd
1 AMLA ie solicitors, Offshore financial
services) are under obligation to report
where the transaction or any other
circumstances concerning that transaction
gives reason to suspect that the
transaction involves proceeds of an
unlawful activity – s 14 AMLA
Trust - LOTA – AMLA –
Overriding obligations : s 20
Reporting obligations shall have effect
notwithstanding any obligations as to
secrecy or other restrictions on the
disclosure imposed by any written law or
otherwise
Trust - LOTA – Duration : s 16
An offshore trust shall … continue to exist
for a period not exceeding one hundred
years; but it may be terminated at any
time in accordance with the provisions of
this Act.
Trust - LOTA – Variation : s 17
Trust may expressly provide that its terms
are capable of variation; or that the trust
itself or a power exercisable under the
trust is revocable, either in whole or in
part.
Where an offshore trust is revoked, either
in whole or in part, the trustee shall hold
the trust property affected by revocation
for the settlor absolutely.
Trust - LOTA – Termination : s 17
Where all beneficiaries are in existence
and ascertained and none of them is a
minor or person under any legal disability,
they may require the trustee to terminate
the trust and distribute the trust property
among them.
Trust - LOTA – Transferability : s
20 & 21
A foreign trust may, if it is so authorized by
the laws of that country or jurisdiction, or
the terms of the trust and its proper law,
be enforceable, recognized or registered in
as if it had been created under this Act – s
20 or
An offshore trust may be transferred to a
foreign jurisdiction – s 21
Trust - LOTA – Beneficiaries: s
22
Beneficiary shall be identifiable by name or
ascertainable by reference to a class or to
a relationship to some person, whether
living or not at the time. If unidentifiable,
trust shall not be valid unless the purpose
is a charitable purpose.
Trust - LOTA – Trustees: s 26
No restrictions imposed on the number of
trustees that may be provided but if there
is only one trustee, the trustee shall be a
trust company; and if there is more than
one trustee, one of such trustee shall be a
trust company
Trust - LOTA – Confidentiality : s
41
Subject to the terms of the trust or Court
order, a trustee shall not be required to
disclose to any person any document or
information
which
discloses
his
deliberations as to how he should exercise
or has exercised his function as trustee,
reasons for his decision or any material
upon which his decision was based upon.
Trust - LOTA – Liability of
trustee : s 42
A trustee who commits or concurs in a
breach of trust shall be liable for any loss
or depreciation in value of the trust
property resulting from the breach; and
any profit which would have accrued to the
trust had there been no such breach.
Trust - LOTA – Non-Applicability
Provisions of the Trustee Act 1949 [Act
208] , the Trustee (Incorporation) Act
1952 [Act 258] and section 9 of the
Government Proceedings Act 1956 [Act
359] shall not apply to an offshore trust
validly created or enforced or registered
under this Act – s 62
Inheritance
Where trust is created, whether local
law will uphold it. C/f with countries
with “forced heirship” such as those
that occurs under Syariah law.
"Forced heirship" is a rule that applies
to an individual whereby, on his death,
his assets must be distributed in a
particular way.
Inheritance
See Re Man bin Mihat, decd [1965] 1
LNS 211, where a muslim took out an
insurance policy naming his wife as
beneficiary. Question arises whether the
money payable under the policy
belongs to her beneficially or forms part
of her husband's estate in which event
it falls to be distributed among his heirs
of whom there are two, his widow and
a minor son.
Inheritance
It was held that Muslim law rigidly
prescribes the share of every heir and no
alteration of these shares may be made by
will, for a bequest to an heir requires the
consent of all co-heirs and a bequest to
strangers may not take effect beyond 1/3
of the testator's estate, but there are no
restrictions beyond these two limitations.
Inheritance
So it is lawful for a Muslim to alter the prescribed
shares of his heirs by disposing outright during his
lifetime part or the whole of his property to a
favoured wife, either directly by way of a gift inter
vivos or indirectly through trustees. If there is no
legal objection to a Muslim altering his heir's share
by himself during his lifetime making a gift through
trustees to a favoured wife, equally there should be
no objection in principle to the validity of a similar
gift made not by himself but by statute.
Inheritance
Examples of other jurisdictions which have strict
rules relating to distributions are found, amongst
others, in the civil law countries of Europe, Japan
and the Arab world.
A disposal of property by an individual during his
lifetime to trustees could defeat or diminish the
rights of his heir under the law affecting his
succession. The validity of a transfer to the trust
could be put into question, which may prevent the
trust from being effective and the trustees might
find that they did not have title to the assets.
Partnership - Labuan Offshore
Limited Partnerships Act 1997
(LOLPA)
not less than two partners and not more than
twenty partners
one at least a general partner and one at
least a limited partner. A person may be both
Partnership – Types - LOLPA
3 types of partnership:
1. Offshore
professional
partnership
–
formed only by professionals who carry
on practice in accounting, actuarial
science, engineering, law or such other
fields as may be prescribed by the
Authority and must have in force
professional indemnity insurance cover.
Partners must be individual - s 3 (4)
Partnership – LOLPA - Types
2. Offshore project partnership - Solely for
the purpose of undertaking the project or
business specified in its partnership
agreement
and
incorporate
in
its
partnership
agreement
a
provision
providing that the offshore project
partnership shall be dissolved after the
completion of the project or business.
Partners must be body corporate – s 3(5)
Partnership – LOLPA - Types
3. Offshore general limited partnership -
may consist of any persons as
partners. Persons may be individual or
a body of persons, corporate or
unincorporate – s 3 (6)
Partnership – LOLPA – Application :
s4
An application
made in prescribed form and accompanied by
the prescribed fee.
One of partners must be either a registered
offshore company, a trust company acting as
trustee or nominee of a non-resident or a nonresident.
filed a partnership agreement. (c/f with Jersey
where no partnership agreement need to be
filed)
Partnership – LOLPA – Agreement
:s4
The agreement would contain particulars
such as the name of the offshore limited
partnership, intended address of its
registered office, the full name and address
of each general partner (place of
incorporation and its registered or principal
office in the case of a company), duration
of existence of the partnership, its nature of
business and other relevant particulars.
Partnership – LOLPA – Certificate
:s4
A certificate of registration will be issued
and effective for a period not exceeding
one year and may be renewed upon
application being made to the Authority in
the prescribed form and accompanied by
the prescribed fee.
Partnership – LOLPA – Change in
partnership : s 5
Any change to the partnership
agreement
the
offshore
limited
partnership shall within 30 days file with
the Authority a notice signed by a
general partner, specifying the nature of
the change. – s 5(1)
Failure to do so is an offence. – s 5(4)
Partnership – LOLPA –
Enforcement of Judgments : s 10
Enforcement of judgments against property
of offshore limited partnership
No judgment shall be enforced against any
property of an offshore limited partnership
unless such judgment has been granted
against a general partner in his capacity as
a general partner of that offshore limited
partnership.
Partnership – LOLPA – Limited
partner : s 8
Contribution of limited partner may be in
the form of money, property, or services.
If other than in cash, a value to be known
as a statutory value shall be assigned to
the value of that contribution or that part
of the contribution or of that intended
contribution or that part of the intended
contribution.
Partnership – LOLPA – Rights of
general partner : s 9
Rights of general partner
The rights of a general partner in an
offshore limited partnership general partner
is similar to that of a partner in a
partnership except for certain acts, the
written consent or ratification by all the
limited partners are required.
Partnership – LOLPA – Rights of
general partner : s 9
Rights of general partner
Any debt or obligation incurred by a general
partner in the course of the activities of an
offshore limited partnership is a liability of
the offshore limited partnership.
Partnership – LOLPA – Rights of
limited partner : ss 12, 13, 14
Rights of limited partner
A limited partner has the right to a share in
the offshore limited partnership profits,
allocated by reference to the percentage of
contributions.
A limited partner is allowed to lend and
borrow money, and enter into transactions
with the offshore limited partnership.
Partnership – LOLPA – Limited
partner’s liability to creditors : s 17
Ltd partner shall not be liable as general
partner
unless
the
limited
partner
participates in the management of the
offshore limited partnership.
Intellectual Property - Legislations
Trade Marks Act 1976
Patents Act 1983
Copyright Act 1987
Industrial Designs Act 1996
Layout-Designs of Integrated Circuits
Act 2000
Geographical Indications Act 2000
Intellectual Property – Trade Marks
No separate Trade Marks law for
Labuan.
The Trade Marks Act 1976 is applicable
throughout Malaysia – s 1(2)
Intellectual Property – Trade Marks
No separate Trade Marks law for
Labuan.
The Trade Marks Act 1976 is applicable
throughout Malaysia – s 1(2)
Intellectual Property – Benefits
An offshore company can purchase or be
assigned the right to use a copyright, patent,
trademark by its original holders with a power
to sub-license. Upon acquisition, the offshore
company can then enter into agreements with
licensees around the world who would be able
to exploit the intellectual property right in
various countries.
Intellectual Property – Benefits
In some cases it may be preferable to acquire,
for example, a patent at the patent pending
stage before it becomes very valuable so that
the capital payment for the acquisition of the
patent can be set at a lower amount.
Intellectual Property – Assignments
Trade Marks 1976, s 55 : Unregistered trade mark
can also be assigned.
Patents Act 1983, s 39 : A patent application or
patent may be assigned or transmitted.
Copyright Act 1987, s 27 : Copyright shall be
transferable
by
assignment,
testamentary
disposition, or by operation of law, as movable
property.
Industrial Designs Act 1996, s 29 : Rights of an
owner with respect to a registered industrial design
are personal property and are capable of assignment
and transmission by operation of law.
Intellectual Property – Trade Marks
Any distinctive sign such logos, pictures,
symbol etc.
Not deceptive/confusing, or contrary to
law and scandalous/offensive.
Not identical or similar to earlier
registered/application trade marks.
Not identical or similar to well-known
trade mark.
S 10
Intellectual Property – Trade Marks
Does Malaysian Registration Give Protection
Abroad?
No. If protection of trade mark is required in other
countries, it will be necessary to apply for
registration
separately
in
each
countries. However, a Malaysian application can
be used as a basis for claiming priority in countries
which are party to the Paris Convention and WTO.
http://www.mipc.gov.my/
Intellectual Property – Trade Marks
Act 1976
Application
Applicant can be a foreigner but if the
applicant for the registration of a trademark
does not reside or carry on business in
Malaysia, he shall give to the Registrar an
address for service in Malaysia which shall
be the address of his agent. S 79
Intellectual Property – Trade Marks
Act 1976
Duration
The duration of a trademark shall be for a
period of 10 years and may be renewed
every 10 years . S 32 & 41
Intellectual Property – Patents Act
1983
No separate Patents law for Labuan.
The Patents Act 1983 is applicable
throughout Malaysia – s 1(2)
Intellectual Property – Patents Act
1983
3 criteria for Patentable Inventions
Be New - which means that the invention has not been
publicly disclosed in any form, anywhere in the world;
Involves an inventive step - that is to say the
invention must not be obvious to someone with
knowledge and experience in the technological field of
the invention; and
Industrially applicable - meaning it can be made or
used in any kind of industry
Ss 11, 14, 15, 16
Intellectual Property – Patents Act
1983
Non-patentable inventions
Discoveries,
scientific
theories
and
mathematical methods;
Plant or animal varieties or essentially
biological processes for the production of
plants or animals, other than man-made
living micro-organisms, micro-biological
processes and the products of such microorganism processes;
Intellectual Property – Patents Act
1983
Non-patentable inventions (con’t)
Schemes, rules or methods for doing
business, performing purely mental acts or
playing games;
Methods for the treatment of human or
animal body by surgery or therapy, and
diagnostic methods practiced on the human
or animal body.
S 13
Intellectual Property – Patents Act
1983
Utility Innovations
an exclusive right granted for a "minor"
invention which does not require to satisfy
the test of inventiveness as required of a
patent.
innovation which creates a new product or
process, or any new improvement of a
known product or process - s 17
Intellectual Property – Patents Act
1983
Duration of patent
20 years from the filing date of the
application.
If prescribed annual fee is not paid, the
patent shall lapse
s 35
Intellectual Property – Copyright
Act 1987
No separate Copyright law for Labuan.
The Copyright Act 1987 is applicable
throughout Malaysia – s 1(2)
Intellectual Property – Copyright
Act 1987
Work eligible for copyright
literary works;
musical works;
artistic works;
films;
sound recordings; and
broadcasts
s7
Intellectual Property – Copyright
Act 1987
Duration
literary works, musical works, artistic works
– subsist during the life of the author and
50 years after his death – s 17
sound recordings, broadcast, films – 50
years from the beginning of the calendar
year next following the year in which the
recording was first published – ss 19, 20, 22
Intellectual Property – Copyright
Act 1987
Copyright works, unlike other IP need not
be registered nor lodged with the Ministry
of Domestic Trade and Consumer Affairs
Malaysia.
To protect, an affidavit or statutory
declaration can be made by any person
claiming to be the owner of the copyright s 42
Intellectual Property – Industrial
Designs Act 1996
No separate Industrial Designs law for
Labuan.
The Industrial Designs Act 1996 is
applicable throughout Malaysia – s 1(2)
Intellectual Property – Industrial
Designs Act 1996
Registrable industrial designs
To be registrable an industrial design must be new
at the date an application for its registration is
filed. A design is considered be new only if it has
not been made available or disclosed to the public
in any way whatsoever in Malaysia before the
filing date of the application and it is not on the
record
the
Register
of
Designs.
S 12
Intellectual Property – Industrial
Designs Act 1996
Definition of industrial design
– features of shape, configuration, pattern or
ornament applied to an article by any
industrial process or means, being features
which in the finished article appeal to and
are judged by the eye, but does not include
method or principle of construction.
Intellectual Property – Industrial
Designs Act 1996
Duration
Deemed to be in force on the filing date and
shall subsist for five years thereafter.
Extension may be made for two further
consecutive terms of five years – s 25
The End
Assisted by:
Sally Kee Seok Meng
LLB (Hons) London
of Lincoln’s Inn, Barrister
Advocates & Solicitors