Securities Commission Malaysia provides further clarity in relation to Single Family Office in Forest City Special Financial Zone

23 June 2025

As may be recalled, on 20 September 2024, Malaysia’s Finance Minister II, Datuk Seri Amir Hamzah Azizan, announced the proposal to introduce an incentive scheme for Single Family Office (“SFO”) (“SFO Incentive Scheme”) as one of the incentive packages for the Forest City Special Financial Zone (“FCSFZ”).¹

Three days later, on 23 September 2024, the Securities Commission Malaysia (“SC”) issued a media release outlining the conditions for the SFO Incentive Scheme.²

Subsequent to the announcement of the SFO Incentive Scheme, our firm has issued the following write-ups in relation to the SFO initiative:

Key points of the SFO Incentive Scheme

Based on the Finance Minister’s keynote address and the SC’s media release mentioned above, a SFO that satisfies the conditions prescribed by the SC will be granted a concessionary tax rate of 0% for up to 20 years.

The conditions that are to be fulfilled to qualify for the concessionary tax rate of 0% are as follows:

Corporate Vehicles: Two related corporate vehicles must be established, namely a single family office vehicle (“SFOV”) which holds the assets and investments of the single family, and a single family office management company (“SFO MC”) which is to manage the assets and investments of the single family.
Location: The SFOV must be established and operate a registered office in Pulau 1 of the FCSFZ.
Duration: 20 years, covering an initial period of 10 years (“initial assessment period”) and an additional period of 10 years upon expiry of the initial assessment period (“subsequent assessment period”).
To qualify for the tax incentive for the initial assessment period:

The SFOV must be a new investment holding company incorporated in Malaysia and seek pre-registration with the SC on its eligibility for the tax incentives;
The SFOV must hold assets under management (“AUM”) of at least RM30 million and meet the minimum local investment in eligible and promoted investments of at least 10% of the AUM or RM10 million, whichever is lower;
The SFOV must incur a minimum operating expenditure (“OPEX”) of RM500,000 per annum locally; and
The SFOV must employ at least two full-time employees (“FTEs”) of whom at least one is an investment professional, with a minimum monthly salary of RM10,000.

To qualify for the tax incentive for the subsequent assessment period:

The SFOV must hold AUM of at least RM50 million and meet the minimum local investment in eligible and promoted investments of at least 10% of the AUM or RM10 million, whichever is higher;
The SFOV must incur a minimum OPEX of RM650,000 per annum locally; and
The SFOV must employ a minimum of four FTEs.

It was also clarified by the SC that the SFO MC will be exempted from the requirement to obtain a fund management licence under section 58 of the Capital Markets and Services Act 2007 (“CMSA”) if the SFO MC can demonstrate that its fund management services are provided solely for the benefit of the SFOV, which is its related corporation.³

Recent updates

On 13 June 2025, the SC issued the following documents which set out in greater detail the requirements relating to the SFO Incentive Scheme:

As the Revised FAQs have provided much greater detail in relation to the SFO Incentive Scheme, we produce herewith some of the questions from the Revised FAQs that will assist in understanding the requirements under the SFO Incentive Scheme.

Establishing a SFO

1.      What is a single family?

A single family refers to a family whose members are lineal descendants of a single ancestor and includes the spouses and children of these individuals. In this regard, the expression “children” includes biological children, stepchildren, a child adopted in accordance with the relevant law.

2.     Can a single family consist of non-Malaysians?

For the purposes of the SFO Incentive Scheme, a single family can consist of either Malaysian or foreign individuals so long as the relationship between these individuals satisfies the criteria of a single family.

3.     What is a SFOV?

A SFOV is a corporate vehicle incorporated under the Companies Act 2016 (“CA 2016”), which is wholly owned directly or indirectly, by one or more individuals, all of whom are members of a single family.

The SFOV must be established solely for the purpose of holding the assets and investments for the interest of members of the single family. For purposes of the SFO Incentive Scheme, the SFOV must be incorporated on or after 1 September 2024.

4.     What is a SFO MC?

A SFO MC is a corporate vehicle incorporated under the CA 2016, which is wholly owned, directly or indirectly by one or more individuals, all of whom are members of a single family. The SFO MC is established for the purpose of managing the assets and investments of the single family for the interest of its members. Under the SFO Incentive Scheme, the SFO MC must also be a related corporation to the SFOV.

For the purposes of the SFO Incentive Scheme, a “related corporation” means a corporation that is:

related to another corporation by virtue of section 7 of the CA 2016; or
deemed to be a related corporation of another corporation where both corporations have the same individual or a group of individuals who:

control the composition of the board of directors of the corporations;
control more than half of the voting power of the corporations; or
hold more than half of the total number of issued shares of the corporation, excluding non-voting shares.

The relationship of the parties mentioned above is depicted in the diagram below:

6. Requirements imposed on the SFO MC in managing the assets of the SFOV

The SFO MC is required to comply with, among others, the following requirements:

the SFO MC must execute a Service Level Agreement (SLA) or Investment Management Agreement (IMA) with the SFOV;
a SFO MC which intends to outsource any part of the AUM may only do so to a Capital Markets Services Licence holder for fund management undertaking portfolio management; and
a SFO MC which intends to enter into an arrangement to jointly manage the SFOV’s assets may only do so with the investment professional employed by the SFOV or in collaboration with other SFO MCs that manage the wealth of the same single family.

7.     Requirement to operate in Pulau 1 of FCSFZ

The SFOV, must operate in Pulau 1, FCSFZ from a dedicated office of at least 450 sq. ft which is not shared with any other person other than the SFO MC. However, the SFO MC is not required to operate in Pulau 1, FCSFZ.

8.     Flexibility for newly established SFOV to qualify for tax incentive for first year of assessment

To qualify for the SFO Incentive Scheme, the SFOV must have its registered address in Pulau 1 of the FCSFZ, for at least six months in its first year of establishment before the end of the year of assessment.

9.     Paid-up capital of the SFOV and SFO MC

No minimum paid-up capital requirements are prescribed for the incorporation of the SFOV or the SFO MC. Applicants should determine the appropriate capitalisation based on their business and operational requirements.

10.    Non-application of SFO Incentive Scheme to Multi-Family Office

The SFO Incentive Scheme is only applicable to SFOs. Multi-Family Offices (MFOs) are not eligible for any tax incentives under the SFO Incentive Scheme.

11.     Application process

The application process⁴ is a two-step process as depicted in the table below.

Application process

Step 1 : Consultation with the SC

Consultation with the SC

Consultation is to deliberate on the SFOV’s fund structure, proposed assets composition and any other arising matters to satisfy the requirements for the tax incentive.

Conditional approval

Submission of completed SFOV Conditional Approval documents to the SC.
Upon complete documentation, the SC shall issue a Conditional Approval letter to the SFOV.

Submission for one-off exemptions

Submission of completed forms and supporting documents for one-off exemption for Capital Gains Tax (CGT) and Stamp Duty on the transfer of qualifying assets to the SFOV as part of its establishment.
Upon complete documentation, the SC shall issue a verification letter for these exemptions.

Step 2 : Annual tax certification

Submission of SFOV tax certification form

At the end of each financial year, the SFOV must apply for tax certification with the SC by submitting the SFOV Tax Certification Form, its audited accounts and relevant supporting documents.

Issuance of tax certification letter

If all requirements are met, the SC will issue a tax certification letter to certify that the SFOV has met the necessary conditions and is eligible for the tax exemption for the relevant year of assessment.

Claiming tax incentive

SFOV to claim tax incentive directly with Inland Revenue Board (IRB).

Upon consultation with the SC or in parallel, prospective applicants may establish the SFOV and the SFO MC and other requirements required under the SFO Incentive Scheme.

Tax Incentive

12. The tax incentives available for SFOVs

The tax incentives available for SFOVs are as set out in the following table:

Beneficiary	Incentive	Main Requirements
SFOV	20 years income tax exemption on all sources of statutory income including capital gains and foreign sourced income at the rate of 0%	The initial assessment period will commence from the date the SFOV first obtains a tax certification from the SC and the subsequent assessment period will commence upon the expiry of the initial assessment period The first application for certification must be received by SC no later than 31 December 2034
SFOV	One-off Stamp Duty Exemption	Exemption of stamp duty in respect of all instruments of transfer of any qualifying assets for the establishment of the SFOV Instrument of transfer must be executed within one year from date of the verification letter obtained from the SC. Applicants are required to provide details of transacting parties, description of assets involved, and estimated consideration as part of the required documentation for this exemption.
A company, limited liability partnership, trust body or co-operative society	One-off Capital Gains Tax Exemption	Exemption from income tax in respect of chargeable income from gains or profits received from the disposal of shares of a company incorporated in Malaysia which is not listed on the stock exchange. Disposal of shares must be made to the SFOV within one year from date of the verification letter obtained from the SC. Applicants are required to provide details of transacting parties, description of assets involved, and estimated consideration as part of the required documentation for this exemption.

Applications for the one-off stamp duty exemption and capital gains tax exemption may be made concurrently with the application to the SC for the Conditional Approval.

13.    Tax incentives for SFO MC

There are no tax incentives for a SFO MC under the SFO Incentive Scheme. It will be subject to the prevailing corporate tax rates in Malaysia.

14.    Consequence of SFOV’s non-qualification for the income tax exemption in a particular year

If a SFOV does not meet the eligibility requirements for the income tax exemption in a given year, it will be subject to prevailing corporate tax rates for that financial year. The SFOV is allowed to apply for tax certification with the SC in the following year once it meets all required conditions. However, the 10-year assessment period will continue to apply from the date of the SFOV’s first certification and will not be extended due to any non-qualifying years.

15.    Certification

The SFO Incentive Scheme will be administered by the SC on behalf of the Government by providing certification to the eligible SFOVs for purposes of their applications for the income tax exemption.

Assets under Management – Types of investment

16.    Minimum AUM requirement under the SFO Incentive Scheme

The minimum AUM requirement under the SFO Incentive Scheme as set out below:

During the initial assessment period, the SFOV must hold AUM of at least RM30 million and meet minimum local investment in eligible and promoted investments of at least 10% of AUM or RM10 million whichever is lower. The remaining 90% of AUM can be invested in any of the permitted investments.

During the subsequent assessment period, the SFOV must hold AUM of at least RM50 million and meet minimum local investment in eligible and promoted investments of at least 10% of AUM or RM10 million whichever is higher. The remaining 90% of AUM can be invested in any of the permitted
investments.

17.    Permitted assets and investments and local eligible and promoted investments

(A) The Permitted Assets and Investments are as follows:

Shares or securities equivalent to shares that are traded on any exchange⁵
Shares of any company incorporated under the CA 2016
Debentures, stocks or bonds issued by any government
Shares in or debentures of, a body corporate or an unincorporated body
Notes, commercial papers and treasury bills
Derivatives traded on a derivatives exchange, or dealt in the over the counter (OTC) market, where the underlying instrument of a derivative is a commodity and is to be settled in cash at all times
Placement of domestic and foreign deposits with a licensed bank
Interest rate or currency contracts on a forward basis, interest rate or currency options, interest rate or currency swaps, and any financial derivatives
Units or shares in collective investment schemes that are managed by an entity which is approved, authorised or licensed by any securities regulator to conduct fund management activities
Assets that are managed by a Capital Market Services Licence holder for fund management undertaking portfolio management
Foreign venture capital and private equity fund
Units in a unit trust fund established in Malaysia and approved or authorised by the SC
Islamic capital market products including Shariah-compliant equities, Islamic Collective Investment Schemes (ICIS) and Sukuk
Real estate limited to Forest City – residential and commercial properties
Any other assets as may be permitted by the SC on a case-by-case basis

(B) The Local Eligible Investments are as follows:

Securities listed on Bursa Malaysia Securities Berhad
Islamic capital market products including Shariah-compliant equities, Islamic Collective Investment Schemes (ICIS) and Sukuk issued by an entity incorporated in Malaysia
Ringgit-denominated debentures and Malaysia Government Securities
Exchange traded derivatives listed on Bursa Malaysia Derivatives Berhad
Private Equity (PE) funds managed by SC registered PE managers
Venture Capital (VC) funds managed by SC registered VC manager
Assets under a portfolio management mandate, where at least 70% of the underlying assets is in Malaysia and the mandate is carried out by a Capital Markets Services Licence holder for fund management undertaking portfolio management
Shares of companies incorporated in Malaysia that is under technology based sectors or relating to Sustainable and Responsible Investments (SRI) asset as set out in the table below
Any other assets as may be permitted by the SC on a case-by-case basis

Categories
Technology-based sectors
Advanced electronics and information, components, systems and architecture, software, applications, communications, supporting product and services Telecommunication Equipment/instrumentation, automation and flexible manufacturing systems Biotechnology, bioconversion and genetic engineering Healthcare Electro-optics, non-linear optics and optoelectronics Advanced materials Energy	Aerospace Transportation Value-add services Emerging technologies Artificial intelligence and machine learning Cybersecurity Green technology Virtual reality and augmented reality Internet of Things (IoT) Automation and autonomous systems Blockchain and distributed ledger technology Financial technology
Sustainable and Responsible Investments
Refer to SRI Taxonomy

Sustainability funds, bonds and sukuk that align with Malaysian or ASEAN standards for underlying Malaysian projects
Islamic Capital Market funds under the Waqf Featured Fund Framework
Equity Crowd Funding (ECF) campaigns on SC-registered ECF platforms
Peer-to-Peer (P2P) campaigns on P2P platforms regulated by the SC
Shares of companies approved by the Malaysian Investment Development Authority (MIDA) to carry out approved projects under the Johor-Singapore Special Economic Zone (JS-SEZ) Tax Incentive Package
Shares of companies operating within the New Industrial Master Plan 2030 (NIMP) prioritised sectors as set out in the table below
Any other assets as may be permitted by the SC on a case-by-case basis

NIMP Prioritised Sectors
Aerospace Chemicals Electrical and Electronics	Pharmaceutical Medical devices

The following are excluded from being considered as permitted assets under the above lists:

tokenised capital market products, i.e. using distributed ledger technology (DLT) to create a digital representation of the assets;
digital assets, as defined in the SC’s Guidelines on Digital Assets; and
shares of private companies whose sole business is holding Malaysian immovable properties without any operational business activities are not eligible local investment.

18.    Restrictions on types of local and promoted investments in the first year

For the first year of assessment, investments into local eligible and promoted investments must be new investments excluding the investments transferred into the SFOV during its establishment. “Assets and investments transferred during the SFOV’s establishment” refers to the assets and investments which were identified and submitted to the SC for verification.

19.    Holding of assets that are not listed as permitted assets

A SFOV may hold assets which are not listed as permitted investments. However, these assets will not form part of the eligible AUM and will not be included in the calculation of the minimum AUM requirement.

20.   Overriding limitation on funds and assets that can be held by a SFOV

A SFOV must comply with the Financial Action Task Force (FATF) recommendations by ensuring that the SFOV’s assets and investments do not originate from or are owned by nationals or residents of countries listed under FATF’s high-risk jurisdictions or jurisdictions subject to increased monitoring (black list and grey list respectively).

Assets or investments owned by a single family comprising nationals of countries which do not have diplomatic relations with Malaysia would also be restricted from being held by the SFOV.

21.    Business operations not included as permitted investments

A SFOV must be established solely for investment purposes. Business operations cannot be counted as eligible investments or included as part of the SFOV’s AUM. Existing business interests related to the family, including operating companies owned by family members, are not permitted to be transferred into the SFOV.⁶

22.   Investments in real estate located outside of Forest City

Real estate investments are strictly limited to residential and commercial properties in Forest City, covering both the real estate on the mainland and Pulau 1.

Additionally, standalone private companies whose sole business is holding Malaysian immovable properties without any operational business activities are also not permitted investments and will not form part of the SFOV’s asset composition.

23.   Transfer of private company shares to the SFOV

Subject to the limitation on standalone private companies mentioned above, equity stakes in private companies incorporated in Malaysia can be transferred into the SFOV. Equity stakes in companies engaged in active business operations are eligible for transfer into the SFOV.

However, equity stakes in property-holding companies that primarily own and trade Malaysian immovable properties are not eligible for transfer into the SFOV, e.g. passive property holding companies and companies holding undeveloped landbanks in Malaysia without any immediate or approved development plans.

24.   Placement of foreign currency deposits with local licensed bank

A SFOV is permitted to place foreign currency in a deposit or multicurrency account with a licensed bank under the Financial Services Act 2013.

25.   Status of bank deposits in a financial institution regulated under BNM

Bank deposits - even those held in financial institutions regulated under BNM – do not qualify as local investments. However, such deposits can be counted towards the 90% portion of AUM under the permitted assets category.

26.   Ensuring smooth capital flows for its AUM under the SFO Incentive Scheme

SFOVs set up by and for both local and foreign nationals may apply for Foreign Exchange Policy (“FEP”) flexibilities to facilitate unrestricted capital flows for their offshore borrowings and foreign currency investments. These flexibilities include:

Borrowing (including issuing foreign currency denominated securities or Islamic securities) any amount in foreign currency from non-resident financial institutions (NRFIs) and other non-related non-residents. The proceeds from such borrowings must be utilised abroad or for business operations within the FCSFZ only.
Investing any amount in foreign currency assets onshore and abroad, provided that the funds for investments are obtained from non-residents or abroad.

SFOVs must register for FEP flexibilities with BNM through the SC if their expected offshore borrowings and investments exceed the current permissible limits. Upon approval, BNM will issue a confirmation letter before these flexibilities can be exercised. Approval is granted for five years, renewable at BNM’s discretion, subject to annual compliance requirements.

Calculation of AUM under the SFO Incentive Scheme

27.   Basis for calculating AUM under the SFO Incentive Scheme

The AUM is calculated using fair value per share which is consistently applied and leads to objective and independently verifiable valuation.

Fair value is the price at which an orderly transaction to sell the asset would take place between market participants at the measurement date under current market conditions transacted on an arm’s length basis and determined with due care and in good faith.

Any changes in valuation methodology should be disclosed and justified, especially where there is a material impact on reported AUM.

28.   Basis for calculating AUM for promoted local investments

Promoted local investments qualify for a 1.5x multiplier in local AUM calculations. For example, an investment of RM1 million into an ECF campaign on a SC-registered ECF platform would be counted as RM1.5 million towards the local AUM requirement.

Officer requirement

29.   Additional requirements with regard to FTEs of the SFOV

In addition to the requirements relating to FTEs of a SFOV announced previously, each FTE must be a Malaysian tax resident and is required to be based in Pulau 1, FCSFZ for at least 182 days in a year.

30.   Qualifications of the investment professional

The investment professional must:

have a minimum of two years of relevant working experience; and
hold at least a degree or a globally recognised professional finance-related certification, such as a Master’s in Business Administration (MBA), Chartered Financial Analyst (CFA), Chartered Accountant, Chartered Banker, Certified Financial Planner (CFP) or other equivalent certifications.

31.    Can the investment professional be a family member

There is no restriction against employing a family member as an investment professional provided he meets the qualification and experience criteria set out under the SFO Incentive Scheme.

32.   Foreign professional FTEs

A SFOV may hire foreign professionals as part of its FTE requirement, including for the investment professional position. However, all FTEs must be Malaysian tax residents and be based in Pulau 1, FCSFZ. The SC will provide visa facilitation for foreign professionals.

33.   Flexibilities for vacancies in meeting the FTE requirements

The following flexibilities will be accorded :

First year of assessment: The requirement to employ two FTEs is met if they are employed for at least six months continuously.
Subsequent vacancies: A vacancy must be filled within three months of the position becoming vacant to maintain compliance with the tax incentive requirements.

Local expenditure

34. Qualifying expenditure for local OPEX

Local OPEX refers to expenses incurred within Malaysia and paid to Malaysian-incorporated companies or local tax residents to qualify under the SFO Incentive Scheme. Examples of qualifying expenditures include:

Employee remuneration (wages, salaries, bonuses, pension contributions, etc.);
Professional services (legal, audit, tax, advisory, management fees);
Rental and utilities; and
Fees paid to the SFO MC for management services.

35. Payments to foreign service providers

A SFOV may engage foreign service providers where necessary. However, payments made to foreign entities will not be counted towards meeting the local OPEX requirement of the SFOV.

Comments

The documents issued by the SC on 13 June 2025 are most informative as they expand on and clarify the requirements relating to SFOs and the SFO Incentive Scheme. It is hoped that these clarifications provide further granularity and clarity to single families who are considering setting up SFOs in the FCSFZ.

Article by Sheba Gumis (Partner) of the Corporate Practice and Jesy Ooi (Partner) of the Wealth Management Practice of Skrine.

¹ The Hon. Minister’s keynote address can be accessed here.

² The SC’s media release on the SFO Incentive Scheme can be accessed here. Simultaneously with the issue of the media release, the SC also issued a 4-paged set of Frequently Asked Questions on the SFO Incentive Scheme.

³ The exemption is pursuant to paragraph 7 of Schedule 3 of the CMSA. Notwithstanding the exemption, the SC may still impose terms and conditions on the SFO pursuant to section 58 of the CMSA.

⁴ The application process is set out in the Single Family Office Scheme – An Introduction.

⁵ Refer to Question 18 of the Revised FAQs for guidance on what “any exchange” refers to.

⁶ It is our understanding that this paragraph clarifies that the SFOV may not directly carry on any other activities (e.g. manufacturing or retail business) as part of its operations, including such activities that are owned by the family members.

This article/alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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Securities Commission Malaysia provides further clarity in relation to Single Family Office in Forest City Special Financial Zone