Labuan Offshores Trusts Act 1996 · Updated to 1 Dec 2011 · Part I · Preliminary
6. Proper law of a trust and power to change proper law
Official textFrom Laws of Malaysia Online, unchanged
Subject to the provisions of this Act, a trust shall be governed by its proper law and shall be interpreted and enforced accordingly.
trust
―trust‖ includes the trust property and the rights, powers, duties, interests, relationships and obligations under a trust;
Subject to subsection (1B), the proper law of a trust shall be—
proper law
―proper law‖ means— (a) the law chosen by the settlor to be applicable to a trust, the choice being expressed or implied in the terms of the trust; or (b) where no law is chosen, the law with which a trust is most closely connected at the time of its creation;
the law chosen by the settlor to be applicable to a trust, the choice being expressed or implied in the terms of the trust; or
where no law is chosen, the law with which a trust is most closely connected at the time of its creation.
In ascertaining the law with which a trust is most closely connected, reference shall be made, in particular, to—
Labuan Trusts 13
the place of administration of the trust designated by the settlor;
the situs of the property of the trust;
the place of residence or business of the trustee; and
the objects of the trust and the places where they are to be fulfilled.
Without precluding other means for ascertaining the designated jurisdiction with which a trust is most closely connected, the terms of a trust designating the place of administration are valid and conclusive if—
a trustee’s principal place of business is located in or a trustee is resident of the designated jurisdiction; or
all or any part of the administration occurs in the designated jurisdiction.
The terms of a trust may provide for the proper law of the trust to be changed from the laws of one jurisdiction to the laws of another jurisdiction and vice versa, subject to the provisions of this Act and to the recognition of such a change by the relevant laws of the other jurisdiction, in particular as regards the validity of the trust and the interests of the beneficiaries.
A change in the proper law shall not affect the legality of, or render any person liable for, anything done before the change.
person
―person‖ includes a corporation, a partnership, a body of persons, corporate or unincorporated, and a corporation sole;
PART IA
ADMINISTRATION OF THE ACT
Terms defined in this Act
business
Defined · s 46B―business‖, in relation to a company, includes the holding of shares or other assets and non-commercial activities;
person
Defined · s 2―person‖ includes a corporation, a partnership, a body of persons, corporate or unincorporated, and a corporation sole;
proper law
Defined · s 2―proper law‖ means— (a) the law chosen by the settlor to be applicable to a trust, the choice being expressed or implied in the terms of the trust; or (b) where no law is chosen, the law with which a trust is most closely connected at the time of its creation;
property
Defined · s 2―property‖ includes— (a) property of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, however acquired; or (b) legal documents or instruments in any form, including electronic or digital, evidencing title to or interest in, such property, including bank cheques, money orders, shares, securities, bonds, bank drafts and letters of credit;
resident
Defined · s 2―resident‖ means any person— (a) who is a citizen or permanent resident of Malaysia; or (b) who has established a place of business and is operating in Malaysia, other than— (i) a Labuan company or a foreign Labuan company incorporated or registered under the Labuan Companies Act 1990; (ii) a Labuan foundation established under the Labuan Foundations Act 2010; and (iii) a partnership registered under the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010, and includes a person who is declared to be a resident pursuant to section 43 of the Exchange Control Act 1953;
settlor
Defined · s 2―settlor‖ means a person who makes a trust and includes a person who provides trust property or makes a testamentary disposition on Labuan Trusts 11 trust or to a trust, but does not include a person who contributes to a unit trust;
terms of the trust
Defined · s 2―terms of the trust‖ means the written or oral terms of a trust or any other terms applicable under its proper law;
trust
Defined · s 2―trust‖ includes the trust property and the rights, powers, duties, interests, relationships and obligations under a trust;
trustee
Defined · s 2―trustee‖ means a person appointed to act as a trustee of a trust in accordance with the provisions of this Act;
Part II
Creation and Recognition of Labuan Trusts
Part III
Beneficiaries of Labuan Trusts
Part IV
Trustees of Labuan Trusts
Part V