How to Incorporate a Labuan Offshore Company

Last week, I finally incorporated the company Aha Moments Inc.  This is the Labuan Offshore company to which I am going to be shifting this blog and the other websites that I’ve been working on. All revenue from the various web properties will flow through the company instead of directly into my US tax-payer id/Social Security Number.  If I understand the accounting, and I don’t claim to be any kind of expert, this changes my tax liability for next year.

I have been getting a lot of questions about how to do this, and so the purpose of this post is to detail my experiences incorporating this business over the last couple months.  I will leave the whys and some of the details to another post.

I went through an agent that was recommended to me through a neighbor of a friend.  They are a law firm in Labuan, Malaysia and have a business built around creating these businesses offshore.  Their website can be found at Law and Commerce Trust Limited. Other agents can by found through a google search of “Labuan Offshore company”.

The following will be my experiences.  Your mileage may vary.

Bottom line.  How much have I paid?

The corporate registration could not happen until I had paid the lawyer fees.  For what I wanted, incorporation and work permit plus dependent visas for my wife and 3 children, it came to USD $5400.  After that, when we went to the Immigration office in Labuan I paid an additional RM 4160 (again for the 5 of us).  There have been some other incidental things I’ve had to pay for like getting photocopies of our marriage license and birth certificates notarized and  mailing those documents and other signed documents to the law firm’s office in Kuala Lumpur.  That has not exceeded RM 300.  If I were to do it again, I would probably find out how to get a certified copy of a document instead of a notarized copy.

Getting started incorporating a Labuan Offshore Company

I traded several emails with the main lawyer, Encik Kamil, and also had an hour long skype conversation.  He was adamant to me that I must be registering a real company and not be pursuing this as simply a visa option.  He has had some companies rejected by the Malaysian government.

He sent me a list of documents that I needed to prepare and send to him before we could get started.

  1. A Labuan offshore company formation questionnaire.  This was sent from them, and helps them fill out the paperwork that they submit to the government.  It asks some normal bio-data, but also gives you three choices for Company Name.  They’ll do the search to see if the name you want is already taken.
  2. Business profile.  Again this is what they need to know to submit paperwork to the government.  They want to know what kind of industry you will be operating in, and where in the world you expect to be working.  For Aha Moments, that’s Internet, and Online Marketing.
  3. Declaration by shareholder.  This is a yes-no questionnaire with information about you, the company owner.   They want to know if you’ve ever been jailed or declared bankruptcy.  That kind of thing.

Some documents I had to prepare later:

  1. Org chart.  Mine looks a little silly with one box with my name on it and the title CEO.  Don’t get cute with your title, apparently there are regulations about what kind of positions expatriates can hold in Malaysian companies.
  2. References letters.  They asked for two.  I had one, and the contact information for another one.  They were looking for present or former customers, or investors.

In a future post I will write up what you can and cannot do with a Labuan Offshore Company and how it differs from a (for lack of a better term) on-shore company.