Labuan Islamic Financial Services And Securities Act 2010 An Overview
Labuan International Business and Financial Centre (Labuan IBFC), an international financial centre established by Malaysia in the island of Labuan since 1990, continues to offer thought leadership and innovative framework for the development of Islamic financial services, in line with Malaysia's aspiration to be an internationally renowned Islamic finance hub. The new Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA) which came into force in February 2010 is a forward-looking piece of legislation that does not only strengthen Labuan IBFC's value proposition of providing one-stop and seamless regulatory framework for Shariah compliant financial and business activities, but quite importantly, facilitating new ways of doing things.
Pursuant to the enactment of the LIFSSA, anyone interested in undertaking Shariah compliant financial and business activities will no longer need to refer to a myriad of legislation that used to be applicable in Labuan previously, namely The Labuan Trust Companies Act 1990, Offshore Banking Act 1990, Offshore Insurance Act 1990, Labuan Offshore Securities Industry Act 1998 and Labuan Offshore Limited Partnerships Act 1997, as these have all been repealed. Whether one is a trust company wishing to offer trustee service in a Sukuk arrangement, or an Islamic bank intending to establish presence, a fund manager planning to offer Shariah compliant funds, or a takaful company aspiring to open for business – all that one needs to do when in Labuan is to refer to LIFSSA.
What is rather interesting is that the LIFSSA also introduces a dedicated framework to do Shariah compliant financial and business activities, whether for or not-for profit, through new types of legal entities which have not been seen in any other jurisdiction before. These include:
under Part IX of the LIFSSA, the formation of the Labuan Islamic foundation, being a foundation whose establishment is undertaken expressly with a view that its aims and operations shall be in compliance with Shariah principles; and under Part X of the LIFSSA, the formation of the Labuan Islamic Limited Partnership (LP) and the Labuan Islamic Limited Liability Partnership (LLP), being such partnerships whose establishment is undertaken expressly with a view that their respective aims and operations shall be in compliance with Shariah principles. These new types of legal entities offer wider options for anyone interested in conducting Shariah compliant...
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