Establishing A Private Trust In Malaysia
Trust that is created for the benefit of one or more ascertainable beneficiaries.
What are the Type of Trusts are most commonly used
- Single Parent Trust
- Special Child Trust
- Golden Age & Healthcare Trust
- Insurance Trust
- Charitable Trust
- Investment Trust
- Property Trust
Detail Explanation on each trust:
Single Parent Trust – for single parent who are divorce or widow
You are the only person your child depend on financially. You are worried that when you passed away, your children’s education, maintenance & healthcare is not taken care of because there’s no one to take care of their welfare.
Special Child Trust – for child with special needs (down syndrome, disable etc)
Planning ahead for your child is never easy, more so when you are not around. It is even more difficult if your child is a special child or disabled or suffering from a major illness. How can you ensure that your child will be taken care of when you are not around?
When planning, you may wish to consider the few points below:-
- Who will take care of your child should you become critically ill or permanently disabled or have departed?
- Would your special child be able to fend for himself when you are no longer around?
- If your child needs constant medical attention or is suffering from a major illness, would your appointed Guardian have the time and resources to provide such attention taking into account that he/she is working or has a family of his/her own?
- Does your child need nursing care in the comfort of his/her home? How do you ensure there is continuous nursing care for your child upon your demise?
- How do you ensure your special child gets the proper education and training?
- What is the cost to take care of a special child?
- Is the Guardian able to provide full attention to a special child?
- What are the financial resources of the Guardian?
- Is her/she competent in handling financial matters?
- Can the Guardian afford to pay for the school fees for the special child?
- Who will make sure the Funds that you have allocated for your child is well managed?
- Whom can you entrust to ensure the assets you have set aside for your child is not taken or manipulated by unscrupulous third parties?
Golden Age & Healthcare Trust – for singles who have to depend on themselves during old age or for those whose children are staying in overseas or you do not want your assets to be mismanaged by your spendthrift beneficiaries
- You wish to maintain your lifestyle during your golden age
- You do not want your loved ones to be burdened with financial responsibility for your maintenance when you have retired.
- You want to be financially independent to take care of yourself in the event you are disabled or critically ill.
- You do not wish to entrust all your hard earned assets to your spendthrift children to manage when you are of old age.
- You wish for someone professional to handle all your finances when you are disabled and unable to handle financial transactions.
Insurance Trust – for couple that bought insurance policies but nominated each other as beneficiaries. What if both husband and wife pass away in a common tragedy? Insurance trust can help distribute income to your young children
As parents, you too would protect your children. For example, you may purchase insurance so that in case something happens to you while they are young, there will at least be cash to provide for their needs. If you have taken insurance, chances are, you may think that you have done enough in providing security to your loved ones by nominating them as your beneficiaries in your insurance policies. Think again.
Are your loved ones completely protected when you nominate them as beneficiaries in your insurance policies? Is that actually enough? You may want to consider:-
- If your spouse is the sole beneficiary to your insurance policy, what happens to the insurance proceeds upon your spouse’s passing?
- If your young children are the beneficiaries, who should claim the insurance proceeds for them in the event both you and your spouse are unable to?
- Are your beneficiaries mature enough to handle large sums of money?
- Is there someone competent enough to assist the beneficiaries?
Charitable Trust – for those who wants to leave a legacy for charity purpose
You wish to set aside some of your assets for charitable purposes either while you are still around or after you have passed on but need to address some questions in your mind:
- You want to ensure that your wishes would be followed?
- You wish to appoint a Trustworthy person who can execute your instructions by determining which charities your assets will be distributed to.
- You wish to make a periodical donation and want to appoint the right person to perform these tasks taking into account the time, perpetuity and expertise required.
- You wish to leave alternative instructions should the charity organisation which you intend to benefit has closed down.
Investment Trust – for those who wants to create a trust with their investment portfolio to protect their family in case death, total permanent disability & critical illness
- You wish ensure that the amount of money you wish to give to your loved ones is enough once you have passed on.
- You wish to ensure that the amount is enough to cover your child’s education fees.
- You wish to protect your loved ones from being affected by the future high living costs.
- You want to be sure there are enough funds to maintain yourself in the future.
Property Trust – for those who wants to retain the property
- You wish to leave your house to your spouse. But your age old mother is also living under the same roof. You are worried that your spouse may sell off the house leaving your mother with no place to live.
- You have a mentally disabled child. You wish to allow your child to continue to stay in the house during his lifetime.
- You are worried that after you passed away, the creditors of your estate may claim the family home.
INCORPORATION OF A COMPANY MALAYSIA
The two types of companies that can be incorporated under the Companies Act 1965 (CA 65) are:
- A company limited by shares
- An unlimited company
1. COMPANY LIMITED BY SHARES
A company having a share capital may be incorporated as a private company (identified through the words ‘Sendirian Berhad’ or ‘Sdn. Bhd.’ appearing together with the company’s name) or public company ‘Berhad’ or ‘Bhd’ appearing together with the company’s name).
The requirements to form a company are:
(i) A minimum of two subscribers to the shares of the company (Section 14 CA);
(ii) A minimum of two directors (Section 122); and
(iii) A company secretary who can be either :
- An individual who is a member of a professional body prescribes by the Minister of Domestic Trade Cooperative and Consumerism; or
- An individual licensed by the Companies Commission of Malaysia (SSM)
Both the director and company secretary shall have their principal or only place or residence within Malaysia.
A. INCORPORATION PROCEDURES
1. Application of Name Search
A name search must be conducted to determine whether the proposed name of the company is available. Refer to Government Gazette No. 716 dated 30 January 1997, Gazette (Amendment) dated 11 October 2001, Guidelines For Naming A Company and Guidelines For Application Of A Company Name. The steps involved are:
(i) Completion and submission of Form 13A CA (Request For Availability Of Name) to SSM; and
(ii) Payment of a RM30.00 fee for each name applied.
Where the proposed company’s name is approved by SSM, it shall be reserved for three months from the date of approval.
2. Lodgement of Incorporation Documents
Incorporation Documents (as further explained in Part B below) must be submitted to SSM within 3 month from the date of approval of the company’s name by SSM, failure of which a fresh application for a name search must be done. (Steps (i) and (ii) above shall have to be repeated).
B. INCORPORATION DOCUMENTS TO BE LODGED WITH SSM
1. Memorandum and Article of Association
An original of the Memorandum and Article of association shall each be stamped at RM100.00. Stamps are affixed at the Inland Revenue Board’s stamp office.
- The first directors and secretaries shall be named in the Memorandum and Article of Association.
- The subscribers to the company’s shares shall sign the Memorandum and Articles of Association in front of a witness.
- Table A of the Fourth Schedule in the CA can be adopted as the Article of Association of the company (Section 30 CA).
*NOTE: For incorporation of a private company, the articles of association shall contain the following stipulations.
(i) Restriction on the right to transfer the company’s shares;
(ii) Limitation on the number of members to not exceed fifty;
(iii) Prohibition to any invitation to the public to subscribe the shares/debentures of the company; and
(iv) Prohibition on public invitation to deposit money with the company.
2. Form 48A (Statuary Declaration By A Director Or Promoter Before Appointment)
The director or promoter declares under oath that:
- He/She is not a bankrupt; and
- He/She has not been convicted and imprisoned for any prescribed offences.
3. Form 6 (Declaration of Compliance)
This declaration states that all the requirements of the CA have been complied with. It must be signed by the company secretary who handles the registration and is named in the Memorandum and Articles of Association.
4. Additional Documents:
- Original copy of Form 13A.
- A copy of the letter from SSM approving the name of the company.
- A copy of the identity card of each director and company secretary.
C. REGISTRATION FEES
Each application for the incorporation of a company shall be accompanied with payment as per the schedule following:
|AUTHORISED SHARE CAPITAL (RM)||FEES (RM)|
|Up to 400,000||1,000|
|400,001 – 500,000||3,000|
|500,001 – 1 million||5,000|
|1,000,001 – 5 million||8,000|
|5,000,001 – 10 million||10,000|
|10,000,001 – 25 million||20,000|
|25,000,001 – 50 million||40,000|
|50,000,001 – 100 million||50,000|
|100,000,001 and above||70,000|
D. CERTIFICATE OF CORPORATION
A Certificate of Incorporation will be issued by SSM upon compliance with the incorporation procedures and submission of the duly completed Incorporation Documents.
2. UNLIMITED COMPANY
The procedures and Incorporation Documents for the incorporation of an unlimited company is the same as company limited by shares. The only difference is that for an unlimited company, the liability of its members must be stated in the Memorandum of Association as unlimited.