Labuan Islamic Financial Services and Securities Act 2010 · Updated to 15 Oct 2022 · Part I · Preliminary
2. Interpretation
Feedback & supportIn this Act, unless the context otherwise requires—
“actuary” means a person being—
a fellow of any of the professional associations listed in the Second Schedule or other associations as may be approved by the Authority; or
a person recognized by the Authority as an actuary for the purposes of this Part, who appears on the list of actuaries maintained by the Authority;
“approved auditor” means an approved auditor under section 10
of the Labuan Companies Act 1990 [Act 441];
“Authority” means the Labuan Financial Services Authority established under section 3 of the Labuan Financial Services
Authority Act 1996 [Act 545];
“authorized officer” means an officer duly authorized by the
Authority;
“bank licensee” means a Labuan bank or a Labuan investment bank licensed under Part VI of the Labuan Financial Services and
Securities Act 2010 [Act 704];
“constituent documents” means the statute, charter, memorandum of association and articles of association, rules, by-laws, partnership agreement, or other instrument, under or by which a person is established and the scope of that person’s functions, business, powers and duties are set out, whether contained in one or more documents;
“corporation” means a body corporate formed or incorporated or existing within Malaysia or outside Malaysia and includes any foreign Labuan company but does not include—
a corporation sole;
a trade union registered under any written law as a trade union; or
a society registered under any written law as a co-operative society;
“court” means a court of competent jurisdiction;
“Court” means the High Court or a judge thereof;
“custodian” means a person who is entrusted by an Islamic mutual fund with custody of the property of the fund pursuant to an agreement to that effect;
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“dealing in securities” means, whether as principal or agent, making or offering to make with any person or inducing or attempting to induce any person to enter into or to offer to enter into—
any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting securities; or
any agreement the purpose or avowed purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the value of securities;
“declaration” means a written statement of facts which the person making it signs and solemnly declares to be true before a commissioner or magisterial officer or notary public;
“director”, in relation to a person specified in the first column of the First Schedule, has the meaning set out in the second column of the First Schedule as against such person;
“Director General” means the Director General of the Authority;
“domestic company” means a company incorporated under the
*Companies Act 1965 [Act 125];
“established”, in relation to a person specified in the first column of the First Schedule, has the meaning set out in the third column of the First Schedule as against such person;
“establishment”, in relation to—
a company, means incorporation;
a statutory body, means the coming into existence under the law establishing, appointing or constituting it;
co-operative society, means registration, incorporation or otherwise the coming into legal existence as a co-operative society;
*NOTE—The Companies Act 1965 [Act 125] has since been repealed by the Companies Act 2016
[Act 777] which comes into operation on 31 January 2017—see subsection 620(1) of Act 777.
a partnership, including a limited partnership and a limited liability partnership, means formation;
a sole-proprietorship, means registration of its business;
and
any other body, association or group of persons, whether corporate or unincorporate, which requires registration or any other form of recording or recognition under any written law before it can lawfully commence its activities, means registration, recording or recognition under such written law;
“expert” includes any engineer, accountant, solicitor, valuer, auditor or any other person whose profession or reputation gives authority to a statement made by him;
“financial year” means the period not exceeding fifty-three weeks at the end of which the balance of the fund’s accounts is struck or, if no such balance is struck or if the period of fifty-three weeks for so doing is exceeded, the calendar year;
“foreign company” means—
a company, a corporation, a society, association or other body incorporated outside Malaysia; or
an unincorporated society, association or other body which under the law of its place of origin may sue or be sued, or hold property in the name of the secretary or other officer of the society, association or body duly appointed for that purpose, and which does not have its head office or principal place of business in Malaysia;
“foreign currency” means any currency other than ringgit;
“foreign Labuan company” means a foreign company registered under Part VIII of the Labuan Companies Act 1990;
“foundation” means a foundation established under the Labuan
Foundations Act 2010 [Act 706], Part IX or such similar entity established under the laws of any recognized country or jurisdiction notwithstanding any statutory definition to the contrary;
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“fund administrator” means a person who, for valuable consideration, provides an Islamic mutual fund with administrative services or facilities alone or with accounting services;
“fund manager” means a person who, for valuable consideration, provides management services alone or with investment advice or administrative services in respect of securities for the purposes of investment, including dealing in securities or such other activity as may be specified by the Authority;
“home supervisory authority” means any relevant authority or body in Malaysia or of any other country which exercises supervisory functions similar to those of the Authority or any person exercising such supervisory functions as may be deemed appropriate by the Authority after taking into account the representations made by the person as to the desirability of or the necessity for the examination;
“internal Syariah advisory board” means the board established under section 130;
“Islamic bank licensee” means a Labuan Islamic bank and a
Labuan Islamic investment bank;
“Islamic bank licence” means a licence granted pursuant to an application under section 63 or 64, as the case may be;
“Islamic mutual fund” or “Islamic fund” means a mutual fund or fund which is established expressly with a view that the aims and operations of such fund shall be in compliance with Syariah principles;
“Islamic private fund” means an Islamic mutual fund—
whose securities are owned or held by—
not more than fifty investors where the first time investment of each of such investors is not less than two hundred and fifty thousand ringgit or such other sum as may be prescribed by the Authority or the equivalent in any foreign currency; or
any number of investors where the first time investment of each of such investors is not less than five hundred thousand ringgit or such other sum as may be prescribed by the Authority or the equivalent in any foreign currency; or
which is designated as an Islamic private fund under regulations made by the Minister, and which is established expressly with a view that the aims and operations of such fund shall be in compliance with Syariah principles;
“Islamic public fund” means an Islamic mutual fund other than an Islamic private fund;
“Islamic self-regulatory organization” means a self-regulatory organization established under Part XI expressly with a view that the aims and operations of such self-regulatory organization are in compliance with Syariah principles, whose object is to regulate the operations of its members or of the users of its services, their standards or practice and business conduct in order to better protect investors and consumer of securities or related services and includes such other organizations as may be declared or recognized as such by the Authority;
“Labuan” means the Federal Territory of Labuan;
“Labuan bank” means a person who is licensed to carry on
Labuan banking business under Part VI of the Labuan Financial
Services and Securities Act 2010;
“Labuan company” has the meaning assigned to it in the Labuan
Companies Act 1990;
“Labuan investment bank” means a person who is licensed to carry on Labuan investment banking business under Part VI of the Labuan Financial Services and Securities Act 2010;
“Labuan Islamic bank” means a person who is licensed to carry on Labuan Islamic banking business under Part VI;
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“Labuan Islamic foundation” means a foundation established under section 107;
“Labuan Islamic investment bank” means a person who is licensed to carry on Labuan Islamic investment banking business under Part VI;
“Labuan Islamic licensed institution” means a person who is licensed to carry on Labuan Islamic financial business under
Part VI;
“Labuan Islamic limited partnership” or “Labuan Islamic limited liability partnership” means a partnership established under section 111;
“Labuan Islamic trust” means a trust established under section 105;
“Labuan trust company” means a person licensed to carry on trust company business under the Labuan Financial Services and
Securities Act 2010;
“liabilities” includes debts, duties and obligations of every kind, whether present or future, or whether vested or contingent;
“licence” means a licence granted under this Act;
“licensed entity” means a person licensed or registered to carry on any activities under any Part of this Act;
“limited liability partnership” means a limited liability partnership formed under the Labuan Limited Partnerships and Limited
Liability Partnerships Act 2010 [Act 707], Part X, or under the laws of any recognized country or jurisdiction notwithstanding any statutory definition to the contrary;
“limited partnership” means a limited partnership formed under the Labuan Limited Partnerships and Limited Liability Partnerships
Act 2010, Part X, or under the laws of any recognized country or jurisdiction notwithstanding any statutory definition to the contrary;
“Malaysian bank” means a licensed bank as defined in the
*Banking and Financial Institutions Act 1989 [Act 372], or an
Islamic bank as defined in the **Islamic Banking Act 1983
[Act 276];
“Malaysian Islamic bank licensee” means an Islamic bank licensee which is an office or a subsidiary of a Malaysian bank;
“Minister” means the Minister charged with the responsibility for finance;
“mutual fund” or “fund” means a Labuan company, a corporation incorporated under the laws of any recognized country or jurisdiction, a partnership, a protected cell company, a foundation, or a unit trust which—
collects and pools funds for the purpose of collective investment with the aim of spreading investment risk;
and
issues interests in a mutual fund which entitle the holder to redeem his investments that is agreed upon by the parties and receive an amount computed by reference to the value of a proportionate interest in the whole or part of the net assets of the aforesaid types of entities, as the case may be, and includes an umbrella fund whose interests in a mutual fund or units are split into a number of different class funds or sub-funds and whose participants are entitled to exchange rights in one part for rights in another;
“office” includes the principal place of business, a branch, an agency, a mobile place of business, a place of business set up and maintained for a limited period only, an electronic terminal and any other place of business;
*NOTE—The Banking and Financial Institutions Act 1989 [Act 372] has since been repealed by the
Financial Services Act 2013 [Act 758] which comes into operation on 30 June 2013—see sections 271
and 272 of Act 758.
**NOTE—The Islamic Banking Act 1983 [Act 276] has since been repealed by the Islamic Financial
Services Act 2013 [Act 759] which comes into operation on 30 June 2013—see sections 282 and 283
of Act 759.
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“officer”, in relation to a corporation, includes—
a director, secretary or employee of the corporation, including the principal officer;
a receiver and manager, appointed under a power contained in any instrument, of any part of the undertaking or property of the corporation; and
a liquidator of the corporation appointed in a voluntary winding-up, but does not include—
a receiver who is also not a manager;
a receiver and manager appointed by the Court; and
a liquidator appointed by the Court or by the creditors;
“participant”, in relation to a person specified in the first column of the First Schedule, has the meaning set out in the fourth column of the First Schedule as against such person;
“partnership” means a limited partnership or a limited liability partnership;
“payment system” means any system of arrangement for the transfer, clearing or settlement of funds or securities, but excludes—
a payment system established or operated by the Central
Bank of Malaysia or operated on behalf of the Central
Bank of Malaysia under the Central Bank of Malaysia
Act 2009 [Act 701];
a clearing house as defined under the Capital Markets and Services Act 2007 [Act 671];
an in-house payment system operated by a person solely for his own administrative purposes that does not transfer, clear or settle funds or securities for third parties; and
a system that solely facilitates the initiation of payment instructions;
“person in control”, in relation to an applicant for a licence or a licensed entity under this Act, means a person who—
is entitled to exercise, or control the exercise of, not less than one-third of the votes attached to the voting shares in such applicant or licensed entity;
has the power to appoint, or cause to be appointed, a majority of the directors of such applicant or licensed entity; or
has the power to make, or cause to be made, decisions in respect of the business or administration of such applicant or licensed entity, and to give effect to such decisions or cause them to be given effect to;
“prescribe” where no mode is mentioned, means prescribe from time to time by order published in the Gazette, and a power to prescribe includes the power to make different provisions in the order, for different persons, classes, categories or descriptions of persons;
“principal officer”, in relation to a licensed entity, means a person, by whatever name called who is responsible, subject to the authority of the directors, for the conduct of the business and the administration of the licensed entity;
“prospectus” means any prospectus, notice, circular, advertisement or invitation inviting applications or offers to subscribe for or purchase securities, or offering any securities for subscription or purchase;
“protected cell company” means a company incorporated, or converted into, a protected cell company in accordance with the provisions of Part VIIIB of the Labuan Companies Act 1990 or such similar entity established under the laws of any recognized country or jurisdiction notwithstanding any statutory definition to the contrary;
“qualified person” means a person who—
is not an undischarged bankrupt;
has not been convicted of any offence arising out of criminal proceedings;
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is of good repute and character; and
possesses the necessary qualifications and expertise in
Islamic commercial law or Islamic jurisprudence, and includes a corporation having in its employment at least one individual meeting the criteria mentioned in paragraphs (a) to (d);
“recognized country or jurisdiction” means a country or jurisdiction as may be specified by the Authority;
“record” means a facility for storing information which can be subsequently retrieved or reproduced;
“ringgit” means a ringgit in the currency of Malaysia;
“securities” means any investments commonly known or capable of being described as securities, and includes—
shares, funds, units, interests in a limited partnership or limited liability partnership or unit trust or foundation or protected cell company or corporation;
notes of or issued by a body (incorporated or unincorporated), government, local government or public authority; and
certificates of interest or participation in, temporary or interim certificates for, receipts for or warrants to subscribe to or purchase any of the instruments described in paragraphs (a) and (b), which are issued expressly to be in compliance with Syariah principles, and include Sukuk;
“Syariah-compliant entity” means any person licensed or registered under the relevant laws administered by the Authority other than this Act and who carries on any business or part of its business which is in compliance with Syariah principles;
“Syariah adviser” means a qualified person appointed by any licensed entity or entity pursuant to this Act to advise on matters relating to Syariah principles;
“Syariah principles” include principles and concepts of Islamic law as approved or adopted, by way of rulings or by any other means, by the Syariah Supervisory Council, or the internal Syariah advisory board of a Labuan Islamic bank or takaful operator, or a Syariah adviser of any entity regulated under this Act, as the case may be;
“Syariah Supervisory Council” refers to the body established under section 7;
“specify”, where no mode is mentioned, means specify from time to time in writing, and a power to specify includes the power to specify differently for different persons or different classes, categories or descriptions of persons and “specified” shall be construed accordingly;
“subsidiary” shall have the meaning assigned to it in the Labuan
Companies Act 1990;
“Sukuk” includes any certificates, instruments, notes and any other evidence of payment obligations of a corporation, body
(incorporated or unincorporated), government, local government or public authority pursuant to any form of financing in accordance with Syariah principles, whether or not constituting a charge on the assets of the corporation, body (incorporated or unincorporated), government, local government or public authority, but shall exclude—
any instrument acknowledging or creating indebtedness for, or for money borrowed to defray the consideration payable under, a contract for sale or supply of goods, property or services or any contract of hire in the ordinary course of business;
a cheque, banker’s draft or any other bill of exchange or a letter of credit;
a bank note, guarantee or an insurance policy;
a statement, passbook or other document showing any balance in a current, deposit or savings account;
any agreement for a loan or a financing where the lender or financier and the borrower or customer are signatories
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to the agreement and where the lending of money or the financing is in the ordinary course of business of the lender or financier, and any promissory note issued under the terms of such an agreement; and
any instrument or product or class of instruments or products as the Authority may prescribe;
“takaful licence” means a licence granted under Part VII;
“takaful licensee” means any person licensed under Part VII;
“trust officer” means an officer of a Labuan trust company approved and designated as a trust officer by the Authority;
“unit trust” means a trust established under the laws of Malaysia relating to Labuan or the laws of any recognized country or jurisdiction for the purpose, or having the effect, of providing facilities for the participation by persons as beneficiaries under the trust in any profits or income arising from the acquisition, holding, management or disposal of any property.
Any reference in this Act to “this Act” shall, unless otherwise expressly stated, be deemed to include a reference to any regulation, rule, order, notification or other subsidiary legislation made under this Act.
Notwithstanding the definition of “securities” under this Act and “interest” as defined in section 66 of the Labuan
Companies Act 1990, the Minister may, on the recommendation of the Authority, prescribe any instrument or product or class of instruments or products to be securities for the purposes of this
Act and the Labuan Financial Services Authority Act 1996.
For the purposes of this Act, Sukuk shall not constitute a unit trust.