Malaysia’s New Family Office Incentive Scheme

Malaysia’s New Family Office Incentive Scheme – a Game changer?

On 23 September 2024, the Securities Commission Malaysia (SC) introduced an innovative Family Office incentive scheme aimed at enhancing Malaysia’s investment landscape. This initiative offers a remarkable 0% tax rate incentive on income generated by eligible investments through Single Family Office Vehicles (SFOV). This strategic move is designed to attract a larger pool of investors, ultimately supporting small and medium enterprises (SMEs) and bolstering the new economy.

Key Requirements for Establishing a Family Office

Forest City will be the first to host these incentives, available for 20 years (split into two 10-year periods). To benefit from the incentive, SFOVs must establish a registered office in the Forest City Special Financial Zone (in Pulau 1, Forest City Special Financial Zone) and meet specific criteria:

Incorporation: The SFOV must be a new investment holding company incorporated in Malaysia.
Assets Under Management (AUM): A minimum of RM30 million is required for the initial 10-year period, increasing to RM50 million for the subsequent 10 years.
Local Investment: At least RM10 million or 10% of AUM must be invested in eligible and promoted investments.
Operational Expenditure: A minimum annual operating expenditure of RM500,000 is required initially, rising to RM650,000 during the additional period.
Employment: A minimum of two full-time employees is needed, with at least one investment professional earning a minimum of RM10,000 monthly. This requirement increases to four employees in the subsequent period.

Moreover, certain licenses under the Malaysian Capital Markets and Services Act 2007 (CMSA) may not be necessary if the management company provides services solely for its SFOV, simplifying the regulatory landscape for investors.

Economic Potential

The SC has highlighted the significant economic benefits of this initiative, projecting an economic multiplier effect ranging from RM3.9 billion to RM10.7 billion. This initiative not only aims to enhance Malaysia’s investor base but also to create skilled jobs and generate demand for ancillary services, making it a win-win for both families and the economy.

Comprehensive Legal Support from our InterAsia Affiliate offices

Our team is here to provide you with comprehensive legal support tailored to your unique needs. Our services include:

Entity formation and structuring: We assist to incorporate the appropriate entity or vehicle for a SFOV set-up.
Obtaining licensing exemptions: We assist with applications to the SC to obtain licensing waivers.
Creating Funds and Sub-Funds: We help structure investment vehicles that align with your family’s financial goals.
Drafting appropriate Memorandum & Articles of Assocation: Our expertise includes modifying constitutional documents to create separate classes of shares, ensuring terms are tailored to your requirements.
Drafting Investment Agreements: We craft agreements that protect your interests while clarifying the terms of investments.
Drafting Share Sale and Purchase Agreements: Our legal oversight ensures smooth transactions and the protection of your assets.
Drafting Fund Administration Agreements: We ensure compliance and operational efficiency through well-drafted agreements.
Creating Compliance Manuals and operating manuals for SFOVs: We develop essential documentation to meet regulatory standards and safeguard sensitive information.
Applying for Residency Passes: Our team assists with residency applications, enabling you and your family to fully benefit from Malaysia’s favourable environment.
Ongoing legal support: Our team of Malaysian-qualified solicitors stand ready to assist with an ongoing legal assistance required.

Contact Us

Do contact our Malaysian Team lead (Nathan Maharajah) at enquiry@iabsasia.com or WhatsApp at +65 9810 1685 for further details. The InterAsia Law Alliance has a team of Malaysian-qualified lawyers and any Malaysian-law advice required for the setting up of the SFOVs and related services will be handled by Malaysian qualified attorneys.