Characteristics of A Labuan Protected Cell Company

Characteristics of A Labuan Protected Cell Company

Labuan Protected Cell Company (PCC) is a way of structuring a limited liability company to form cells where each cell is legally independent of one another. To simplify, each cell can carry out businesses independently without affecting the other cells under the umbrella of the Labuan Protected Cell Company (PCC).

The Labuan Protected Cell Company (PCC) structure is recognised for the following areas of businesses:

  1. Labuan insurance business – use to separate the assets of life, pension and individual policyholders in a risk-controlled environment
  2. Labuan captive insurance business – to segregate areas of risk and activity into different cells
  3. Labuan mutual fund business – can be structured for private or public with various classes of shares, multi-classes of funds to be placed and classified in the specific cells.

Uses of the Labuan Protected Cell Company (PCC)

* Holding of assets and investments divided into a number of classes
* Holding of assets and investments based on objectives of the different investors
* Preserve the independence of each cell like separate business units
* May act as a core to hold non-cell assets
* Segregate and protect the assets with the creation of several cells

Below is an overview of a Labuan Protected Cell Company Characteristics:

Labuan Protected CellDescription
Governing ActLabuan Company Act 1990
Legal EntityA corporate single entity consists of main core with unlimited number of cells
Core CellIt is the main core of the Labuan PCC with assets and liabilities recorded separate from the cells
Each CellIndependent unit where it has its own unique names
Segregation of Assets and LiabilitiesEach cell has it own capital, assets and liabilities of each protected cell are ring-fenced by law from the liabilities of the other cells including the core cell
Shares IssuanceAssets of a cell comprises assets representing the consideration paid or payable for the issues of the cell shares and reserves attributable to the cell shares and all other assets attributable to or held within the cell
Capital Requirement for Captive/Takaful Insurance ActivityUnimpaired by losses of RM500,000 for the whole PCC
Protection of Cell AssetsSeparate records for cell assets held by each cell separate from other cells’ assets and from general assets. There must be a clear segregation and identification CELL SHARES and CELL SHARE CAPITAL
LiabilityOnly assets attributed to a cell are available to satisfy the claims of creditors of that particular cell. The core sell liability only limit to the amount of shares or assets placed in that particular cell. The insolvency of each cell will not affect the whole business and the performances of other cells
Board of DirectorMin. one at the core and it can form committee to manage each cell
Labuan company be converted to Labuan PCCYes, subject to Labuan FSA approval
Registered Address Principal Office of the Trust Company
Resident SecretaryTrust Company
Constituents DocumentsTo be kept in the Registered Office
Public Access No, unless with the permission from the Directors/Shareholders
Corporate Tax -guided by Labuan Business Activity Tax Act 1990Trading Activity: 3% with audited report or pay flat fee of RM20,000 with management account reporting
Non-Trading

Activity: 0% tax with management account reporting
Business TransactionsIn any foreign currency except Malaysia Ringgit
Reporting Requirements1. Consolidated Financial Report of the PCC within 6 months after the close date of the each financial year. For mutual fund activity, the report required to be distributed to investors
2. Separate sets of financial statements for each cell
3. Statistical Reporting required from time to time
Withholding TaxNo withholding tax payable to non-residents on dividends, royalties, technical fee, management fee, lease rental and interest
Dividends To ShareholderNo personal tax on dividends received by individual/corporate shareholders
Stamp DutyExempted on all instruments including transfer of shares relating to offshore business activities

The annual fee payable to Labuan FSA depends on nature of the business:

Insurance and Takaful Core cell – RM 30,000 and each additional cell – RM10,000
Mutual Fund and Islamic Mutual Fund Core cell – RM 5,000 and each additional cell – RM 2,000


Feel free to email us at contact@labuanbusiness if you intend to set up a business in Labuan. We “simplify the complexities” to guide you on the right entity for your business to meet your objective in Malaysia! 

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