Labuan Foundations: Wealth & Succession

What is a Labuan Foundation?

A Labuan foundation is a separate legal entity established under the Labuan Foundations Act 2010. Unlike a trust, the foundation owns assets in its own name and is governed by a foundation charter rather than a trust deed. This hybrid structure combines features of a company (separate legal personality) with the wealth-planning objectives of a trust.

Foundations are particularly popular with clients from civil-law backgrounds in Europe, China, Taiwan and Indonesia, where the foundation concept is more familiar than a common-law trust. The key parties are: the founder (who establishes and funds the foundation), the officer (who administers day-to-day management), and the secretary (a licensed Labuan trust company). A foundation council may also be appointed to provide oversight.

Because Labuan foundations must be registered with Labuan FSA and appoint a licensed secretary under the Labuan Foundations Act 2010, the structure delivers legal certainty and regulatory oversight alongside the succession-planning flexibility civil-law families expect.

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What Labuan foundations are used for

Family Wealth Preservation

Holding family assets across generations in a single structure, with clear rules for distribution, governance and succession of council membership.
Succession Planning

Transferring wealth to the next generation without the cost, delay and publicity of probate. Assets in the foundation pass according to the charter, not the local succession law.
Holding Company Shares

A foundation can hold shares in operating companies or investment vehicles, acting as the ultimate owner in a multi-layer structure while remaining private.
Philanthropic Purposes

A Labuan foundation can be established for charitable or philanthropic purposes, with the charter defining the mission and the council overseeing distributions to qualifying recipients.
Divorce and Family Disputes

Assets properly transferred into a foundation before a matrimonial dispute may be protected from family law claims, depending on the jurisdiction and timing of transfer.
Forced Heirship Protection

Clients from civil-law jurisdictions with mandatory inheritance rules can use a Labuan foundation to structure succession according to their own wishes rather than local forced heirship provisions.

Why use a Labuan Foundation

Separate Legal Personality

The foundation owns assets in its own name as a distinct legal entity. This delivers the certainty civil-law clients expect, without relying on the common-law trust concept.

Confidentiality by Design

There is no public register of Labuan foundations or beneficiaries. The charter and the identities of those involved remain private and are not accessible to third parties.

Regulated Framework

Foundations are registered with Labuan FSA and administered by a licensed Labuan trust company as secretary, providing legal certainty and ongoing regulatory oversight.

Flexible Charter

The charter can be tailored to your family or philanthropic objectives, defining governance, council composition, distribution rules and succession provisions.

How to set up a Labuan Foundation

1

Consultation

We discuss your objectives, family circumstances and the assets to be settled. We confirm a foundation is the right structure and identify any cross-border considerations.

2

Charter Drafting

We draft the foundation charter to your specific situation: purpose, council composition, distribution rules, succession terms and any reserved powers for the founder.

3

Registration

We register the foundation with Labuan FSA, appoint Signature Trust as licensed secretary and put the officer arrangements in place.

4

Funding & Administration

Assets are transferred into the foundation. We administer the structure on an ongoing basis: council records, accounts, distributions and regulatory filings.

Frequently asked questions

Common questions about Labuan foundations.

What is the difference between a Labuan foundation and a trust?

A Labuan foundation is a separate legal entity that owns assets in its own name, governed by a foundation charter. A trust is a legal arrangement in which a trustee holds assets on behalf of beneficiaries. Foundations suit clients from civil-law backgrounds; trusts suit common-law backgrounds. Both provide comparable levels of asset protection and succession planning, though through different legal mechanisms.

Is a Labuan foundation registered publicly?

No. There is no public register of Labuan foundations. The existence and terms of the foundation are confidential and are not accessible to third parties.

Can a Labuan foundation hold assets outside Malaysia?

Yes. A Labuan foundation can hold assets anywhere in the world, including foreign company shares, real estate, bank accounts and investment portfolios. The foundation holds these assets in its own name as a legal entity.

Who governs a Labuan foundation?

A Labuan foundation is administered by an officer, who is responsible for day-to-day management, and a secretary, which must be a licensed Labuan trust company. A foundation council may also be established under the charter to provide oversight of the officer. The council is optional for private foundations but mandatory for charitable foundations that solicit public donations. The founder may sit on the council, provided the majority of council members remain independent.

What is the difference between a Labuan foundation and a Labuan holding company?

A holding company is a commercial corporate vehicle used to hold shares and investments for business purposes. A foundation is typically used for personal and family wealth management, succession planning or philanthropic purposes. Both can hold assets, but their governance, purpose and legal character differ significantly.

Do I need a Labuan trust company to set up a foundation?

A licensed Labuan trust company acts as secretary to the foundation. Signature Trust holds the required Labuan FSA licence to act in this capacity and provides secretary services for Labuan foundations.