Terminating or Dissolving a Labuan Company

 

In general, there are two ways for a Labuan company to be terminated or dissolved.

1. Voluntary Initiated Wind Up Process

A Labuan company can initiate a wind up process by applying to the Labuan FSA under Section 131A of the Act for the Declaration of Dissolution Notice.

The following documents and processed are required to proceed to voluntarily terminate the Labuan company:

  • Statutory declaration by the director or member
  • Close all company bank accounts
  • Zeroised all items in the Balance Sheet and fulfill all debt obligations to all creditors
  • A written acknowledgment in the form of a Tax Clearance notice from the Inland Revenue Board to the Authority, that it has no objection to the dissolution of the company (clear from any tax obligations)
  • Notice regarding Declaration of Dissolution sent to all the directors and members, informing them of the intent
  • A copy of the local advertisement in one of the local newspaper (eg. Borneo Times) and one in an international financial newspaper (eg. Wall Street Journal)

With no objection received from any potential objectors from the above declaration, the Labuan FSA will likely to approve the dissolution application within 2 weeks after the end of the 30 days notice period.

Any fees including annual fees owed by the Labuan company to the Labuan FSA should be paid in full prior to the Declaration of Dissolution.

Note: The Labuan FSA will keep the Declaration of Dissolution Notice publication valid for 6 years.

For any obligations such as debts and liabilities that are not discharged, the Labuan FSA or any creditors may apply to Court within the validity date of 6 years to revoke the dissolution.

 

2. Default in Annual Fees Payments

A Labuan company can be struck off for failing to make its payments to the Labuan FSA.

A Labuan company is required to make payment for annual fees to the Labuan FSA within one month before the anniversary date of the Labuan company incorporation.

Failing to do so, a notice will be issued by the Labuan FSA, giving the Labuan company a 6 months period to make the necessary payments.

If the annual fees due was not paid within the 6 months, another notice will be issued and an additional 50% penalty on top of the annual fees will be imposed. This notice has a one-month expiry period

Failing to make the necessary payment before the expiry of this notice, the Labuan FSA will delist the Labuan company and remove it from its Registrar of Companies.

However, the Labuan company is still liable for all the fees, penalties, claims, debts, liabilities and obligations for the next 3 years.

After 3 years, the Labuan company will be deemed dissolved.

 

In order to avoid complication with the authority, feel free to contact us as we can help to advise on the simpler and cost-effective route for you to simplify matters regarding terminating and dissolving your Labuan company.