Labuan Offshores Trusts Act 1996 · Updated to 1 Dec 2011 · Part II · Creation and Recognition of Labuan Trusts
9. Validity of Labuan trust
Official textFrom Laws of Malaysia Online, unchanged
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.
Labuan trust
―Labuan trust‖ has the meaning assigned to it under subsection 8(1);
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Malaysia
―Malaysia‖ means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the Labuan Trusts 9 territorial waters, and includes any area extending beyond the limits of the territorial waters of Malaysia, and the sea-bed and subsoil of any such area, which has been or may hereafter be designated under the laws of Malaysia and in accordance with international law as an area over which Malaysia has sovereign rights for the purposes of exploring and exploiting the natural resources, whether living or non-living;
A Labuan trust shall be invalid and unenforceable in Labuan where—
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;
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);
it comprises property the receipt, ownership or control of which is or would be such an offence as referred to in paragraph (a); or
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.
Where a Labuan trust is created for two or more purposes of which some are lawful and others are unlawful—
the whole trust is invalid if the unlawful purposes cannot be properly separated; or
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.
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
trustee
―trustee‖ means a person appointed to act as a trustee of a trust in accordance with the provisions of this Act;
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concerning the trust property and his obligations in relation to the trust.
trust property
―trust property‖ means the property for the time being held on trust;
A settlor or beneficiary of a Labuan trust may also request for directives from the Court as to matters referred to in subsection (4).
settlor
―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 defined in s 2
beneficiary
Defined · s 2―beneficiary‖ means a person entitled to benefit under a trust or in whose favour a discretion to distribute property held in trust may be exercised;
Labuan trust
Defined · s 2―Labuan trust‖ has the meaning assigned to it under subsection 8(1);
Malaysia
Defined · s 2―Malaysia‖ means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the Labuan Trusts 9 territorial waters, and includes any area extending beyond the limits of the territorial waters of Malaysia, and the sea-bed and subsoil of any such area, which has been or may hereafter be designated under the laws of Malaysia and in accordance with international law as an area over which Malaysia has sovereign rights for the purposes of exploring and exploiting the natural resources, whether living or non-living;
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;
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;
trust property
Defined · s 2―trust property‖ means the property for the time being held on 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 III
Beneficiaries of Labuan Trusts
Part IV
Trustees of Labuan Trusts
Part V