Protection for family-owned business with a Labuan Trust and Foundation
Business operators especially businesses with long legacies that are family owned, should consider the idea of establishing foundations and trusts to accumulate, manage and protect their wealth to ensure long-term benefits for generations to come.
Labuan International Business and Financial Centre (Labuan IBFC) has information that approximately 70% of the companies that are listed on the Bursa Stock Exchange (Malaysian stock exchange), are family-owned businesses and they contributed more than 50% of Malaysian’s GDP. While they have done tremendously well for years, there is no certainty that their success will for more years to come.
While external factors are uncertain, it is essential that the wealth generated by these companies that are family businesses, are well managed and protected. There is this concern of uncertainties especially with the younger generations that will be inheriting the company because they may not have the level of expertise to manage such a big company.
There was a case, where a company’s founder who filed a suit against his children to return the shares of the company and other assets worth over RM400 million, which he distributed to them previously.
Then there was another case relating to a divorce settlement of a public figure that amounted to RM400 million.
Such cases could have been mitigated or the impact could have been minimized if they had done wealth management using instruments such a trust and a foundation. These instruments can assist the companies to have a safer and structured distribution of wealth including protection against family feud.
Forming a trust and a foundation in Labuan, which can also be Syariah compliant, will assist companies in achieving such objectives. To start, you can read up more information about Labuan Trust and Labuan Foundation.
For companies or family businesses that are still looking for the Islamic wealth management instruments, may consider looking into Labuan Trust or Labuan Foundation as a potential solution.