Malaysia legislation
Section 11
Section 11
(a)
was so created or registered or disposed of by or on behalf of the settlor with principal intent to defraud that creditor of the settlor; and
(b)
did, at the time such creation or registration or disposition took place, render the settlor, insolvent or without property by which that creditor’s claim, if successful, could have been satisfied, then such creation, registration or disposition shall not be void or voidable and the Labuan trust shall be liable to satisfy the creditor’s claim out of the property which but for the creation, registration or disposition would have been available to satisfy the creditor’s claim and such liability shall only be to the extent of the interest that the settlor had in the property prior to the creation, registration or disposition, and any accumulation to the property, if any, subsequent thereto.
(2)
For the purpose of subsection (1), in determining whether a
Labuan trust created or registered or a disposition has rendered the settlor 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 settlor’s property (not being property of or relating to the trust), at the time immediately after such creation, registration or disposition, and in the event that the fair market value of such property exceeded the value of the creditor’s claim, at that time, after the creation, registration or disposition, then the Labuan trust so created or registered or the disposition shall for the purposes of this
Act be deemed not to have been so created or registered, or the property disposed of, with principal intent to defraud the creditor.
Labuan Trusts 21
(3)
A Labuan trust created or registered in Labuan and a disposition of property to such trust shall not be fraudulent as against a creditor of a settlor—
(a)
if its creation or registration, or the disposition, takes place after the expiration of two years from the date that creditor’s cause of action accrued; or
(b)
if its creation or registration, or the disposition, takes place before the expiration of two years from the date that creditor’s cause of action accrued and that creditor fails to commence such action before the expiration of one year from the date of such creation or registration, or disposition.
(4)
A Labuan trust created or registered in Labuan and a disposition of property to such trust shall not be fraudulent as against a creditor of a settlor if the creation or registration, or the disposition of property, took place before that creditor’s cause of action against the settlor accrued or had arisen.
(5)
A settlor shall not have imputed to him an intent to defraud a creditor solely by reason that the settlor—
(a)
has created or registered a Labuan trust or has disposed of property to such trust within two years from the date of that creditor’s cause of action accruing; or
(b)
is a beneficiary.
(6)
Where a Labuan trust 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.
(6A)
Where the settlor of a Labuan trust is a resident, this section shall apply only in so far as it is consistent with any written law for the time being in force in Malaysia.
(7)
For the purposes of this section, the date of the cause of action accruing shall be—
22 Laws of Malaysia ACT 554
(a)
the date of that act or omission which shall be relied upon to either partly or wholly 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
(b)
in the case of an action upon a judgement, 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 judgement itself.
(8)
In this section, the term ―creditor‖ includes any person who alleges a cause of action.
Purpose trusts