In contemporary society, there’s a growing trend towards philanthropic endeavors, driven by an increasing desire to contribute to the well-being and welfare of others.
A charitable foundation stands as a timeless concept and a valuable tool for individuals seeking to channel their charitable aspirations. Charity, in its broadest sense, encompasses actions arising from a sense of moral obligation or compassion towards others, untainted by personal gain or pleasure.
In Islamic tradition, the equivalent of a charitable foundation is known as waqf. Waqf, a Muslim endowment, has historically played a significant role in providing essential public services and infrastructure for the community’s advancement since early Muslim civilizations. A waqf is established by a living individual who dedicates certain property, perpetually allocating its proceeds or benefits for charitable purposes in accordance with Islamic law. Notably, in Malaysia, waqf is not classified as a trust under the Trustee Act 1949.
You can opt to incorporate a company limited by guarantee under the Companies Act 2016. This structure combines aspects of both a company and a foundation, providing a legal.
CLBG is a public company incorporated with the principal liability of its members limited by the constitution to such amount as the members undertake to contribute to the assets of the company if the company is wound up.
CLBG is divided into two type, those with the word ‘Berhad’ or ‘Bhd’, and those without such word.
Trustee (Incorporation) Act 1952
(TIA 1952)
This is another method for establishing a foundation overseen by the Prime Minister’s Department, unlike the CLBG for which the responsible authority is the Companies Commission of Malaysia (SSM). TIA 1952 applies solely to Peninsular Malaysia.
Trustees appointed by any body or association, must apply for a certificate of registration from the Minister. Upon approval, the trustees are incorporated as a body corporate with perpetual succession.
No specific objects requirements imposed on the applicant. Every registered society must adhere to the provisions of the Federal and State Constitutions.
Once registered, the society must provide the information to the Registrar of Societies, including details on its financial accounts from the previous year and any pecuniary benefits or advantages, such as money or property received from entities outside of Malaysia.
A foundation can also be established under specific statute of Parliament, the Financial Reporting Foundation (“FRF”) pursuant to the Financial Reporting Act 1997. It function to oversee the Malaysian Accounting Standards Board. The FRF is also required to keep and audit proper accounts of its fund.
Other examples of foundations established under acts of Parliament are Tunku Abdul Rahman Foundation Fund, and Tun Razak Foundation, as established under Tunku Abdul Rahman Foundation Fund Act 1966 and Tun Razak Foundation Act 1976 respectively.
Embarking on the path of wealth preservation and succession planning in Malaysia, the Labuan Private Foundation emerges as a powerful and favored tool, especially in the Asian region. Governed by the Labuan Foundation Act 2010, it stands as a registered corporate body with a separate legal entity from its managers, offering unparalleled advantages for private wealth management, business succession, and asset preservation in Malaysia.
Consulting with legal and financial advisors experienced in foundation establishment can help you navigate the complexities of the process and ensure that your foundation is set up in accordance with applicable laws and best practices.
With a Labuan Private Foundation, the founder maintains 100% control at all times. The founder has the flexibility to structure and manage the foundation, determine the types of assets to hold or invest, and make alterations as desired through the Charter.
The founder, whether an individual or a corporation, can dictate the foundation’s structure and management, ensuring a tailor-made approach to wealth management and succession planning.
Compared to other wealth management options like trusts, Labuan Private Foundation offers a cost-effective solution for both initial setup and ongoing maintenance.
Protected by the Labuan Foundation Act 2010, the foundation is a corporate body entitled to enter contracts and execute lawful dealings. Importantly, the founder is shielded from foreign claims, providing security against liquidation for obligations such as divorce settlements, lawsuits, or creditor claims after a two-year period.
Labuan Private Foundation allows for the holding of global assets, including those in Malaysia, with no minimum requirement for initial setup. For those seeking a robust and flexible framework for wealth management and succession planning in Malaysia, the Labuan Private Foundation stands out as an ideal choice. Its adherence to international standards and regulatory flexibility make it a preferred option for high-net-worth individuals and corporations alike in the realm of Private Foundation in Malaysia. Whether you’re focused on Private Foundation in Malaysia for charitable causes or wealth management, the Labuan Private Foundation offers a unique and advantageous solution.
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