Introduction to Limited Liability Partnership in Malaysia

Thinking of registering a Limited Liability Partnership in Malaysia? We are here to assist you:

What is a Limited Liability Partnership?

A Limited Liability Partnership (LLP) is a combination of a partnership and a limited liability company. To illustrate what was mentioned beforehand 1 :

1. LLP is featured with the protection of limited liability to its partners similar to the limited liability enjoyed by shareholders of a company coupled with the flexibility of internal business regulation through partnership arrangement similar to a conventional partnership;
2. Any debts and obligations of the LLP will be borne by the assets of the LLP and not that of its partners;
3. An LLP has the legal status of a body corporate which is capable of suing and being sued in its own name, holding assets and doing such other acts and things in its name as bodies corporate may lawfully do and suffer; and
4. LLP also offers flexibility in terms of its formation, maintenance and termination while simultaneously has the necessary dynamics and appeal to be able to compete domestically and internationally.

Limited Liability Partnership in Malaysia is governed mostly by the Limited Liability Partnership Act 2 .

How do you establish an LLP?

1. Register the names of the proposed partners with SSM (at the same time, create an account i.e. proposed name and password with SSM).
2. Once the names of the proposed partners are in the SSM database, log on to https://www.myllp.com.my/ to create the LLP.
3. An LLP may be registered by an application made to the registrar (online) by furnishing the following information:
   • Name of the proposed LLP;
   • General nature of the proposed business of the LLP;
   • Proposed registered office of the LLP;
   • Name and details of every person who is to be a partner of the LLP;
   • Name and details of the compliance officer(s) of the LLP;
   • If the LLP is formed for the purposes of carrying on any professional practice, the application shall be accompanied by an approval letter from the governing body as specified in the third column of the First Schedule of the Act; and
   • Such other relevant information as may be specified by the registrar.

How do I close down an LLP?

There are three ways in which a LLP can be closed down.

1. Receivership and winding-up by the court

The principles of receivership and winding-up of a company limited by shares (under the Companies Act 3 and Companies Winding Up Rules 4 ) applies in such a situation, subject to modifications and adaptations as may be necessary for an LLP 5 .

2. Striking-off

The court registrar can actually strike-off a LLP from the register, if the registrar has reason to believe that:

• The LLP is not carrying on business/ not in operation;
• Contravened the Act;
• Prejudicial to the national interest;
• No acting liquidator for a court-ordered winding up; or
• The LLP is fully wound-up and there are no assets/ assets available are not sufficient to pay the costs of obtaining an order of the court to dissolve the LLP.

Usually, what happens is the registrar will send out a notice to the LLP or its partner, specifying his intention to strike-off the LLP (based on the reasons above). The registrar will then make an informed decision, based on whether there was a reply from the LLP or its partners/ the reasons given as to why the LLP should not be struck-off by the registrar 6 .

This does not mean that the partner’s liability is absolved once the LLP has been struck-off. As pointed out by the Act 7 , the liability of every partner continues and may be enforced as if the name of the limited liability partnership had not been struck-off.

3. Voluntary winding up

The more common method of closing down an LLP is via voluntary winding up via an application to the registrar- it usually occurs when all the partners agree to close down the LLP and provided that the LLP has ceased to operate and has discharged all its debts and liabilities 8 .

The avoid any complication and undue delay in the submission within the required time as stated under the Act 9 , the applicant should follow the steps given below:

• Obtain a written notice from the Inland Revenue Board (IRB) of Malaysia that it has no objection to the registrar making a declaration of dissolution of the LLP;
• Send a notice to all partners via registered post notifying the intention to close down the LLP;
• Published a notice in one widely circulated Malaysian newspaper in Bahasa and one in English to the effect that the applicant proposes to apply to the registrar for a declaration of dissolution of the LLP; and
• Execute a statutory declaration as required and submit the application (alongside all the documents above online 10 ) for a declaration of dissolution to the registrar within 7 days from the date of the publication of notice in the newspapers.

If the registrar is satisfied with the application i.e. no one opposed the dissolution/ the reason for opposing is not reasonable, the register will then make a declaration of dissolution provided all the surplus assets have been distributed accordingly within 14 days to each of the partners of the LLP.

You may want to read:

1. 3 Types of Business Set-up in Malaysia
2. Registration of Business in Malaysia: Limited Liability Partnership
3. Company Secretary in Malaysia
4. Business Lawyer in Malaysia
5. Company Registration Malaysia

Thinking of registering a Limited Liability Partnership in Malaysia? We are here to assist you:

5. Section 49 (1) and (2), Limited Liability Partnership Act 2012.

6. Section 51 (2)(a)-(c), Limited Liability Partnership Act 2012.

7. Section 51 (3)(a), Ibid.

8. Section 50 (2), Ibid.

9. Namely section 50 (3) and (4), Ibid.