Malaysia legislation
Section 58
Section 58
(a)
was so established or registered or disposed of by or on behalf of the founder with the principal intent to defraud a creditor of the founder; and
(b)
did, at the time such establishment or registration or disposition took place, render the founder insolvent or without property by which the creditor’s claim, if successful, could have been satisfied, then such establishment, registration or disposition shall not be void or voidable and the Labuan foundation shall be liable to satisfy the creditor’s claim to the extent of the interest that the founder had in the property prior to the establishment, registration or disposition, and any accumulation to the property, if any, subsequent to it.
(2)
For the purposes of subsection (1), in determining whether a Labuan foundation established or registered or a disposition has rendered the founder insolvent or without property by which a creditor’s claim, if successful, may be satisfied, regard shall be had to the fair market value of the founder’s property, at the time immediately after such establishment, registration or disposition.
(3)
In the event that the fair market value of the property referred to in subsection (2) exceeded the value of the creditor’s claim, at that time after the establishment, registration or disposition, then the Labuan foundation so established or registered or the disposition shall for the purposes of this Act be deemed not to have been so established or registered, or the property disposed of, with principal intent to defraud the creditor.
Act 706
(4)
A Labuan foundation established or registered in Labuan and a disposition of property to such Labuan foundation shall not be fraudulent as against a creditor of a founder—
(a)
if its establishment or registration, or the disposition took place before the creditor’s cause of action against the founder accrued or had arisen;
(b)
if its establishment or registration, or the disposition, takes place after the expiration of two years from the date the creditor’s cause of action accrued; or
(c)
if its establishment or registration, or the disposition, takes place before the expiration of two years from the date the creditor’s cause of action accrued and the creditor fails to commence such action before the expiration of one year from the date of such establishment or registration, or disposition.
(5)
A founder shall not have imputed to him an intent to defraud a creditor solely by reason that—
(a)
the founder has established or registered a Labuan foundation or has disposed of property to such Labuan foundation within two years from the date of the creditor’s cause of action accruing; or
(b)
the founder is a beneficiary.
(6)
Where a Labuan foundation is liable to satisfy a creditor’s claim in the manner provided for in subsection (1) but is unable to do so by reason of the fact that the property has been disposed of, other than to a bona fide purchaser for value, then any such disposition shall be void.
(7)
For the purposes of this section, the date of the cause of action accruing shall be—
(a)
the date of that act or omission which shall be relied upon either partly or wholly to establish the cause of action;
and if there is more than one act or the omission is a continuing one, the date of the first act or the date on which the omission first occurred, as the case may be;
and
Labuan Foundations 45
(b)
in the case of an action upon a judgment, the date of that act or omission, or where there is more than one act or the omission is a continuing one, the date of the first act or the date on which the omission first occurred, as the case may be, which gave rise to the judgment itself.
(8)
In this section, the term “creditor” includes any person who alleges a cause of action.
Accounts to be kept