YOUR BETTER ALTERNATIVE TO AN INCORPORATED COMPANY IN MALAYSIA
Limited Liability Partnership ("LLP")
LLP is an alternative business vehicle regulated under the LLP Act 2012 which combines the characteristics of a company and a conventional partnership. This makes it a great option for professionals, startups and SMEs (particularly, JVs, VCs) who are looking to gain limited liability status whilst accommodating different partners for management flexibility.
Here’s what you need to incorporate a LLP.
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Everything that is required from you to get started.
Your eligibility as a LLP Partner
At least 2 partners resides in Malaysia
Age of 18 and above
Photocopy of IC
Consent letter (if your proposed LLP name is similar to related or associated corporation/ is a trademark / has controlled words)
However, you shall appoint at least one Compliance Officer chosen amongst the partners, who is a citizen / permanent resident of Malaysia, an undischarged bankrupt, not disqualified to act as director under the Companies Act 2016 and ordinarily resides in Malaysia, before you can set-up LLP.
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Reasonable. Affordable. Sustainable.
Included RM500 (SSM Registration Fees)
Name application (1 time) & registration fee
Preparing 2 sets of certificate of registration and Form LLP Registration
Professional advice on statutory / compliance / accounting / tax matters
Prepare resolution to open first LLP’s bank account
Prepare minutes of first Partners’ meeting
Additional things you may need
One-off services upon your request.
Advisable to have a Partnership Agreement. If not, LLP Act 2012 will apply.
Annual Retainer Fee
General advisory on LLP, annual declaration filing & preparation and disclosure of beneficial owners’ interest
Bank Account opening assistance
Requires your presence at the bank / our office
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For Limited Liability Partnership
What is a Limited Liability Partnership (LLP)?
LLP is an alternative business vehicle offering a hybrid of characteristics between conventional partnership and a company. Its special features are that of a conventional partnership in terms of the flexibility in its administration and a company in terms of the limited liability status conferred to its partners.
Why LLP in Malaysia?
- To provide the business community with an alternative business vehicle to complement the traditional choices of sole proprietorships, partnerships and companies (local and foreign)
- To provide access to limited liability status for partnership type businesses
- More affordable business vehicle
What is the difference between an LLP and a general partnership?
The LLP offers limited liability to its partners whereby any debts and obligations of the LLP will be borne by the assets of the LLP. In the case of a conventional partnership the partners has unlimited liability jointly and severally in the partnership.
What is the difference between an LLP and a Company?
There are many fundamental differences between an LLP and a company. Amongst others, the differences are:-
- No issuance of shares
- Flexibility in making decisions
- No formal requirement for Annual General Meetings
- No requirement to submit financial statements to SSM
- Accounts need not be audited.
What types of organisations are likely to be users or beneficiaries of LLP?
- Small businesses (Start Ups)
- Professionals Groups (e.g. Lawyers, Accountants or Company Secretaries)
- Joint ventures
- Venture capitals
How does it work?
What information is require to register an LLP?
An LLP can be registered by way of an application made to the Registrar by providing the following information:-
- proposed name of the LLP
- nature of business
- address of registered office
- name and details of partners
- name and details of compliance officer
- approval letter (in cases of professional practice)
Is there any limit to the number of partners?
There must be minimum 2 partners and no limit for maximum number of partners.
Who can be the partners in an LLP?
Individuals (natural persons) or bodies corporate or a combination of both.
Is there any need for a partnership agreement?
Yes. However, in the absence of agreement as to any matter set out in the Second Schedule of the LLP Act 2012, provision of the Second Schedule relating to that matter shall apply.
Will the partners of the LLP be held personally liable for the debts incurred by the LLP?
No. It is the LLP that will be liable. However, a partner will be jointly and severally liable for his own wrongful act or omission in the course of the business of the LLP. The LLP however is not bound by what the partner has done in dealing with a person if:-
the partner acted without authority; or
the person with whom the partner was dealing knows that the partner acted without authority or does not know that he is a partner of the LLP.
Under the LLP Act 2012 there is a requirement for an LLP to appoint at least one compliance officer. What are the requirements for a person to be appointed as a compliance officer of an LLP?
The compliance officer has to be either from amongst the partners of the LLP or a person qualified to act as a secretary under the Companies Act 1965 who :-
(a) is a citizen or permanent resident of Malaysia; and
(b) ordinarily resides in Malaysia.
What are the responsibilities and liabilities of a compliance officer?
The main responsibilities of a compliance officer are such as:-
- Registering any changes in registered particulars of the LLP;
- Keeping and maintaining registers and records of the LLP; and
- Ensuring publication of names of the LLP in accordance with the provisions of the Act.
A compliance officer is personally liable to all penalties including administrative penalty imposed on the LLP unless if he can prove that he is not liable.
Can an existing business vehicle such as a company or a partnership firm convert into an LLP?
Yes. In the case of a company, only a private company incorporated under the Companies Act 2016 is allowed. In the case of a partnership, only firms which are registered under the Registration of Business Act 1956 or any firms carrying on professional practices are allowed.
Can a sole-proprietorship convert into an LLP?
A sole proprietorship cannot convert into an LLP as it only has 1 member. The sole proprietor must find at least one more person to be a partner before he can register an LLP.
Can an LLP re-convert to a private company?
No. The LLP will have to be voluntarily wound up first and then incorporate as a new company.