Definitions of insurance business and takaful business amended in Labuan Financial Services and Securities (Amendment) Act and Labuan Islamic Financial Services and Securities (Amendment) Act

28 July 2022

The definitions of “insurance business” and “takaful business” in the Labuan Financial Services and Securities Act 2010 (“LFSA 2010”) and the Labuan Islamic Financial Services and Securities Act 2010 (“LFSA 2010”) have been amended pursuant to the Labuan Financial Services and Securities (Amendment) Act 2022 (“LFSA 2022”) and Labuan Islamic Financial Services and Securities (Amendment) Act 2022 (“LIFSA 2022”)

Both LFSA 2022 and LIFSA 2022 are deemed to have come into operation on 1 January 2019.

Labuan Financial Services and Securities (Amendment) Act 2022

The key amendments made to LFSA 2010 include the following:

  • Removal of subsection 8(2) of LFSA 2010 which provides that no offer or invitation to subscribe for debentures of, or to deposit money with or lend money to, a Labuan company or a foreign Labuan company, shall be made to residents of Malaysia, except by a bank licensee unless otherwise allowed in writing by the Labuan Financial Services Authority (“Authority”).
  • Definition of “Labuan insurance business” in respect of Part VII (Labuan Insurance) of LFSA 2010 has been amended to mean insurance and reinsurance business which includes takaful and retakaful business, Labuan captive insurance business and such other insurance business approved by the Authority but does not include any insurance business that is regulated or prohibited under other written law in Malaysia.
  • Substitution of subsection 114(3) of LFSA 2010 which now provides that a licensed Labuan insurance broker may handle the insurance or reinsurance of domestic insurance business, transacted in Malaysian currency provided that such activity does not include any activity that is regulated or prohibited under other written law in Malaysia.

 

Labuan Islamic Financial Service and Securities (Amendment) Act 2022

The key amendments made to LIFSA 2010 are as follows:

  • Removal of subsection 13(2) of LIFSA 2010 which provides that no offer or invitation to subscribe for sukuk of a Labuan company or a foreign Labuan company shall be made to residents of Malaysia except by an Islamic bank licensee or a bank licensee, unless otherwise allowed in writing by the Authority.
  • Definition of “Labuan takaful business” in respect of Part VII (Labuan Takaful Business and Labuan Takaful Related Activities) of LIFSA 2010 has been amended to mean takaful business which includes Labuan captive takaful business, Labuan retakaful business and such other takaful business approved by the Authority but does not include any takaful business that is regulated or prohibited under other written law in Malaysia.

Substitution of section 90(3) of LIFSA 2010 which now provides that a licensed Labuan takaful broker may handle the takaful or retakaful of domestic takaful business transacted in Malaysian currency, provided that such activity does not include any activity that is regulated or prohibited under other written law in Malaysia.