Securities Commission Malaysia Outlines Family Office Incentive Scheme - Move To Attract More Families Manage Their Wealth From Malaysia

The Securities Commission Malaysia (SC) welcomes the Government’s announcement on the new Family Office incentive scheme, which is aimed at enhancing investment landscape in Malaysia.  

This comes after the Prime Minister Dato’ Seri Anwar Ibrahim’s announcement last year on policies to encourage establishment of family offices in Malaysia to draw a larger pool of investors that will widen the financing support for SMEs and the new economy.

Minister of Finance II, Senator Datuk Seri Amir Hamzah Azizan announced the Single Family Office scheme as part of incentive packages for the Forest City Special Financial Zone on Friday (20 September 2024). The SC has been tasked with coordinating the Single Family Office incentive scheme.

The incentive provides for a 0% concessionary tax rate on income generated by eligible investments from the Single Family Office Vehicle (SFOV¹).  

The Forest City will be the first location in Malaysia to offer a 0% tax rate incentive for Family Offices.  

The incentives offered are subjected to several conditions. They include:  

1. Location: Establish and operate a registered office in Pulau 1, Forest City Special Financial Zone.  
2. Duration: 20 years, covering the initial period of 10 years and additional/subsequent 10 years.  
3. To qualify for Initial Period (10 years):
   •  The SFOV must be a new investment holding company incorporated in Malaysia and seek pre-registration with the SC on the eligibility of the tax incentives;
   •  Management company or SFO² which is a related company of SFOV to be set up and operate out of Pulau 1, Forest City Special Financial Zone with at least one investment professional with minimum monthly salary of RM10,000.
   • Hold AUM of at least RM30 million; meet minimum local investment in eligible and promoted investments of at least 10% of asset under management (AUM) or RM10 million whichever is lower;
   • SFOV to spend operating expenditure (OPEX) locally a minimum of RM500,000 annually;
   • Employ a minimum of two full-time employees of whom at least one is an investment professional, with minimum monthly salary of RM10,000;
4. To qualify for Additional Period (additional 10 years):
   • Hold AUM of at least RM50 million; meet minimum local investment in eligible and promoted investments of at least 10% of asset under management (AUM) or RM10 million whichever is higher;
   • SFOV to spend OPEX locally (30% higher than Initial Period) a minimum of RM650,000 annually;
   • Employ a minimum of four full-time employees.

The SFO or management company may not need to get certain licenses under the Capital Markets and Services Act 2007 (CMSA), such as for fund management, as long as it only provides services for its related corporation, the SFOV.

The SC Chairman Dato’ Mohammad Faiz Azmi said that this move taps on the rising trend of Family Offices globally, providing comprehensive wealth management solutions, while leveraging on Malaysia’s robust regulatory environment.

“Establishing the SFO Scheme positions Malaysia to enhance its investor base by attracting regional and Malaysian families to manage their wealth from Malaysia,” he said.   

“The projected economic multiplier of this initiative from the local substance requirements is estimated to range from RM3.9 billion to RM10.7 billion, which also includes the positive effects on creation of skilled employment and the demand for other ancillary services,” he added.

Eligible SFOVs may apply to the SC for certification for purposes of the tax incentives, subject to the SFOVs demonstrating that it has complied with the relevant conditions.

The SC is currently working with the relevant stakeholders to operationalise the scheme by the first quarter of 2025.  

For more information or any queries regarding the Family Office Scheme, please refer to the FAQ available here or email SFOScheme@seccom.com.my.

Background:

1. Family Offices, with their patient capital approach, typically invest in bonds, equities, and private market investments, focusing on high-growth enterprises and contributing to long-term economic development and sustainable growth.
2. A “single family" refers to individuals who are direct descendants of a common ancestor, including their close relatives.