Reasons for purchasing a shelf company in Labuan
is an important offshore jurisdiction which is among the preferences of investors who want to generate profits in this part of Asia and who are interested in a specific tax structure. A shelf company
is usually chosen by entrepreneurs wanting to save time and skip the formalities of company incorporation. Also, there are cases in which a company needs to be active on the market for a particular period of time in order to propose and conclude varied contracts. Future clients or collaborators can be gained if a company has longevity on the market, like in the case of a shelf company in Labuan
. Likewise, it is good to know that corporate credits are easily accessed and obtained with a shelf company instead of a newly-formed one. As it is already mentioned, a shelf company has a clear history meaning there are no liabilities, a matter which will be seriously evaluated by creditors who can also perform or solicit due diligence operations. In this matter, the creditors will be informed of the new company
management and ownership, especially if it is a ready-made company
involved. Even though it is not the case in Labuan
, it must be mentioned the fact that shelf companies with bad debt history can remain on a shelf for a long period of time with lower chances for such companies to re-enter the market.
Buying a ready-made company in Labuan
There are several changes to be done in a shelf company
purchased by a client. For example, the company’s shares need to be transferred to the new owner in Labuan, a new name (not imposed) can be chosen by the proprietor, a new business address can be added if the owner wants to. The next step is to nominate a board of managers for the company and to agree and sign the responsibilities which can also be mentioned by the Articles of Association. An important thing to consider is that a shelf company
is registered with a standard constitution. When such a company is transferred to the new owner, information must be comprised by that constitution by adding the exact changes in this matter. The credibility of a ready-made company in Labuan
in front of financial institutions is definitely offered by the history of such firm, with the mention that an older company is more appealing to banks or potential investors. Even though there are many local or foreign entrepreneurs in Malaysia who think that opening a company
from scratch is the proper option for their needs, there are cases in which the incorporation time is about the same as for buying a ready-made company. There is a complete attention of local authorities in matters of company formation in a fast manner because they aim to ease such a procedure in order to gain even more investors by providing a solid and reputable business climate no matter the activities and the chosen sector for their operations. Let us remind you that our company formation specialists in Labuan
are at your service if you would like to buy a shelf company
in Malaysia or if you are interested in setting up a Labuan trust
Due diligence is the verification process performed when purchasing a Labuan shelf company. It is an essential step and investors who wish to expedite the process may risk purchasing a legal entity that does not have its documents in order or one which in fact has certain debts to creditors/has entered into transactions. Of course, when purchasing a shelf company assisted by one of our Labuan company formation agents, we will provide complete documentation that attests to the trustworthiness of the legal entity you plan on purchasing.
Some of the key documents are listed below:
- the incorporation/constitutive documents;
- the register of members and that of the directors/officers;
- the shareholder agreement;
- the license/licenses, if applicable;
- other documents related to any past transactions, any relevant accounting records, etc.
In some cases, an extensive due diligence phase may mean that the company will not start trading as soon as the investors had hoped. This is why one should be well aware that there are situations in which purchasing a Labuan shelf company is not necessarily faster than incorporating a new legal entity. Nonetheless, the other advantages such as longevity remain in place and they can prove to be invaluable for further business operations, thus justifying the verification and acquisition.
Short conclusion about shelf companies in Labuan
Aged companies in Labuan
are chosen by entrepreneurs who want a solid history in a business, a good corporate credit for future investments and who are interested in obtaining the business support of reputable companies on the market. There are many cases in which an older company is chosen for future collaborations instead of a newly incorporated firm in Malaysia. A bank is highly interested in the firm’s background and debt history before granting a credit. The fast registration of a ready-made company in Malaysia
is definitely a solid advantage when it comes to choosing such type of firm instead of incorporating a new one from scratch. There are many shelf companies in Malaysia
which are incorporated in varied sectors like IT, business consulting, manufacturing, tourism, retail and many more. Foreign investors who do not need or are not interested in a traditional office for their business in Labuan
can solicit and buy virtual office packages
which come with a notable business address, mail collection, and forwarding in agreement to the mentioned requests, phone and fax services, bank statement collection and many more. In the same package, the owner can receive a private local number and can benefit from the services of a virtual assistant at any time. There are many reasons why you should buy a ready-made company, but for more details and assistance in this matter, you may get in touch with our team of consultants in Malaysia.
General information about company formation in Labuan
The Labuan shelf company is incorporated as per the laws applicable in this jurisdiction and it observes the regulations as any other legal entity. This also means that it shares all the important advantages of any company incorporated in Labuan. We remind investors of these characteristics:
- low tax: the corporate income tax in Labuan is 3% on the chargeable income derived from Labuan activities in case of treading companies and non-trading companies are not subject to tax;
- there are no indirect taxes, no stamp duty and no exchange control;
- legal entities are subject to low reporting requirements: trading companies are asked to file an annual statutory declaration and tax return within three months from the start of the year of assessment.
An important distinction is made between trading and non-trading companies and foreign investors who wish to purchase a ready-made company should be well aware of the differences. A trading activity includes banking, trading, insurance, management, shipping and others. At the same time, a Labuan shelf company that is incorporated and sold for non-trading purposes will be used for Labuan leasing or Islamic leasing, as a trading company, fund management company, fund administrator, development company, holding company and others.
Companies need to observe substance requirements as well as other important provisions for licensing and control, according to their type. These aspects are generally communicated when the ready-made company is purchased.
Special requirements apply for companies that offer financial services. Our experts some examples below:
- a Labuan entity involved in investment holding activities needs to have at least 1 full-time employee in Labuan and a minimum amount of annual operating expenditure in this jurisdiction of RM 20,000;
- a Labuan company involved in pure equity holding activities is not asked to have a full time employee in Labuan;
- a Labuan leasing company that has no more than 10 related leasing companies needs to have 2 full-time employees in Labuan for each group of companies and RM 100,000 for each leasing company;
- when the number of related Labuan leasing companies is higher, the number of full-time employees in the jurisdiction will also be higher, for example 3 for each group of companies, when the group consists of 11 to 20 related Labuan companies.
Investors who are interested in purchasing a Labuan shelf company in 2021 can reach out to our experts. We can provide complete details on how to choose an existing company, what you should verify (we provide complete due diligence services upon request) and how to make the subsequent changes and registrations, if needed.
The Labuan International Business and Financial Centre
is the one that licenses companies for the purpose of engaging in specific activities. For example, it is the one that issues the securities license for companies that deal in securities as well as provide investment advice or administration concerning securities for the purpose of investment. A Labuan shelf company can apply for this license if it will engage in these types of activities, provided that it meets the application requirements and pays the annual fee of RM 5,000.