Labuan Offshores Trusts Act 1996 · s 9

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9.
Validity of Labuan trust
(1) A Labuan trust, validly created in accordance with or as provided by this Act, whether in Labuan or abroad, shall be recognized and be enforceable in accordance with its terms, by the courts in Malaysia situated at Labuan or at such other place as may be designated by the Chief Justice of the Federal Court notwithstanding the provisions of any other law.

18                                    Laws of Malaysia                               ACT 554
(2) A Labuan trust shall be invalid and unenforceable in Labuan where—
(a)  it requires, purports or encourages the doing of any act which is an offence under the laws of Malaysia or which, if carried out in Malaysia, would be such an offence:

Provided that if the act takes place in any country other than Malaysia, it must also be punishable as a criminal offence under the laws of the other country or a jurisdiction within the other country in which it takes place;
(b)  it has income accruing to, or derived by it, which originates from an operation, transaction or other activity which is or would be such an offence as referred to in paragraph (a);
(c)  it comprises property the receipt, ownership or control of which is or would be such an offence as referred to in paragraph (a); or
(d)  the Court declares that the object for which it was created has failed or that the terms of the trust are such that its performance is not possible.
(3) Where a Labuan trust is created for two or more purposes of which some are lawful and others are unlawful—
(a)  the whole trust is invalid if the unlawful purposes cannot be properly separated; or
(b)  where the unlawful purposes can be properly separated, the Court may make a finding that the trust is valid with respect to the lawful purpose or purposes which do not affect the validity of trust to the extent and under the conditions as may be determined by it.
(4) Where the trustee of a Labuan trust is of the opinion that the trust is or may be, in whole or in part, invalid, he shall seek directives from the Court as to the validity of the trust and as to any matter

Labuan Trusts                                          19
concerning the trust property and his obligations in relation to the trust.
(5) A settlor or beneficiary of a Labuan trust may also request for directives from the Court as to matters referred to in subsection (4).

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s 9Validity of Labuan trust

(1)

A Labuan trust, validly created in accordance with or as provided by this Act, whether in Labuan or abroad, shall be recognized and be enforceable in accordance with its terms, by the courts in Malaysia situated at Labuan or at such other place as may be designated by the Chief Justice of the Federal Court notwithstanding the provisions of any other law.

18 Laws of Malaysia ACT 554

(2)

A Labuan trust shall be invalid and unenforceable in Labuan where—

(a)

it requires, purports or encourages the doing of any act which is an offence under the laws of Malaysia or which, if carried out in Malaysia, would be such an offence:

(b)

it has income accruing to, or derived by it, which originates from an operation, transaction or other activity which is or would be such an offence as referred to in paragraph (a);

(c)

it comprises property the receipt, ownership or control of which is or would be such an offence as referred to in paragraph (a); or

(d)

the Court declares that the object for which it was created has failed or that the terms of the trust are such that its performance is not possible.

(3)

Where a Labuan trust is created for two or more purposes of which some are lawful and others are unlawful—

(a)

the whole trust is invalid if the unlawful purposes cannot be properly separated; or

(b)

where the unlawful purposes can be properly separated, the Court may make a finding that the trust is valid with respect to the lawful purpose or purposes which do not affect the validity of trust to the extent and under the conditions as may be determined by it.

(4)

Where the trustee of a Labuan trust is of the opinion that the trust is or may be, in whole or in part, invalid, he shall seek directives from the Court as to the validity of the trust and as to any matter

Labuan Trusts 19

concerning the trust property and his obligations in relation to the trust.

(5)

A settlor or beneficiary of a Labuan trust may also request for directives from the Court as to matters referred to in subsection (4).