Protected Cell Companies - Labuan Structures

Labuan Structures

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Overview

A Labuan protected cell company (PCC) is an alternative solution to standard corporate structures. It may be incorporated as a new Labuan company or converted from an existing Labuan company. A PCC is a limited liability company with a legal entity that has the ability to form “cells”. A PCC may comprise:

A core for holding non-cell assets or general assets; and
Any number of cells with the intention of segregating and protecting the assets of each respective cell.

Neither the core nor the individual cells created are separate legal entities but nonetheless, each cell is legally separated from any other cell and each has sufficient attributes to carry on business independently under the “umbrella” of the Labuan PCC.

As one of the innovative business structures, PCC may also be structured to further enhance the insurance and mutual funds industries. In particular, PCC as insurance captives are typically use to insure risks which are difficult to obtain insurance covers from the market. They can also be used as an efficient risk management tool which operates similar to a protected insurance set-up.

Frequently Asked Questions

What is Labuan Banking?
Labuan banking means the business of receiving deposits on current accounts, deposit accounts, savings accounts, and includes the investment banking business, Labuan financial business, Islamic banking business and such other transactions and terms and conditions as specified by Labuan FSA in any currency including Malaysian Ringgit where permitted by Bank Negara Malaysia.
What is Investment Banking?
Investment banking means the business of providing credit facilities and consultancy and advisory services relating to corporate and investment matters, including making investments on behalf of any person. Other activities include undertaking foreign exchange transactions, interest rate swaps, dealings in derivative instruments or derivative financial instruments or any other similar risk management activities.
What is Islamic Banking?
Islamic banking is defined as a banking business that is in accordance with Shariah principles.
Who may apply for a Labuan banking license?
Organisations that meet the following minimum criteria may apply for a Labuan banking licence:
Must be a bank or financial institution;
Possesses a sound track record;
Accorded a good credit rating by acceptable rating agencies;
Supervised by a competent regulatory authory; and
Conforms to generally accepted standards of international banking practices or the Bank for International Settlements (BIS).
What is the minimum working fund for an investment bank?
RM10 million or its equivalent in any other currency.
What products and services are currently offered by Labuan banks?
Labuan banks offer the following products and services:
Term/fixed deposits in major international currencies;
Project financing (project evaluation/feasibility studies);
Capital restructuring;
Revolving credit;
Syndication / loan arrangement;
Trade financing (letter of credit);
Islamic financing;
Performance and financial guarantees;
Private banking / portfolio fund management;
Investment banking / corporate advisory (initial public offerings (IPO), mergers and acquisitions);
Listing of financial instruments on the Labuan International Financial Exchange (LFX);
Proprietary trading and investment (bonds, equities);
Remittances;
Foreign exchange;
Foreign currency term loan;
Derivatives (interest rate swaps, cross currency swaps);
Hedging (interest rates – Chicago Board of Trade (CBOT), London Interbank-Offered Rate (LIBOR), etc); and
Correspondent banking (for Malaysian banks).
Can Malaysian residents obtain loans from Labuan banks?
With respect to trade financing, buyers and sellers can be outside of Malaysia and the underlying goods to be exported to, or imported from, other countries may also include Malaysia.

What You Need to Know