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LIMITED LIABILITY PARTNERSHIP
1INTRODUCTION TO LLP1.6 Comparative chart between LLP and various other businessvehicles in MalaysiaCOMPANYLIMITED LIABILITYPARTNERSHIP ntributionShare capitalPartnerscontributionPartnerscontributionOwn contributionOwner(s) of thebusinessCompany(members / share holders own ‘shares’in the company thatgive them certainrights in relation tothe Company)LLP (partners have ashare in the capitaland profits of theLLP)PartnersSole ProprietorSeparate legal entitySeparate legal entityNot a separate legalentityNot a separate legalentityParty that is liablefor debts of the businessCompanyLLPPartnersSole ProprietorResponsibility formanagement ofbusinessBoard of DirectorsPartnersPartnersSole ProprietorPersonal liabilityNo personal liabilityof individual directoror shareholderNo personal liabilityof partner, except forown wrongful act oromission or withoutauthorityUnlimited liability(jointly andseverally liable withthe partnership)which can extend topersonal assets ofthe partnersUnlimited liabilitywhich can extend topersonal assets ofthe sole proprietor2 to 20 partners(Except forpartnerships forprofessional practicewith no maximumlimit)Sole proprietor onlyLegal StatusLiabilities borne bythe directors orshareholders are tothe extent of unpaidshares onlyNo. OfShareholders/Partners4Minimum 2 and maximum 50 in privatecompanyLiabilities borne bythe partners arejointly and severallywith the LLP to theextent of contributiononlyMinimum 2 and nomaximum limit
1INTRODUCTION TO LLP1.INTRODUCTION TO LIMITED LIABILITY PARTNERSHIP (LLP)1.1 About LLPLLP is an alternative business vehicle to carry out business which combines thecharacteristics of a private company and a conventional partnership. LLP provides limitedliability status to its partners and offers the flexibility of internal arrangement through anagreement between the partners.This combination will give entrepreneurs and businessmen a more structured businessvehicle compared to a sole proprietorship or a conventional partnership. It provides theflexibility of controlling the business operation in accordance with the partnership agreementwhilst enjoying the limited liability status compared to a company which is subject to strictcompliance requirements under the Companies Act 1965 in most of its affairs.LLP is a business vehicle which would offer simple and flexible procedures in termsof its formation, maintenance and termination while simultaneously has the necessarydynamics and appeal to be able to compete domestically and internationally. The LLP was alsointroduced in countries such as the United States of America, United Kingdom, Singapore,India and Japan as a form of alternative business vehicle.1.2 Salient features of LLP2 LLP is a body corporate and has legal personality separate from its partners(separate legal entity). *#5 2'42'67#. 57%%'55 10T 0; %*#0)'5 0 4'.#6 10 61 6*' 2#460'45 1( #0 9 . 016 #(('%6 6*' ': 56'0%'X rights or liabilities of the LLP. *#5 70. / 6'& %#2#% 6; #0& %#2# .' 1( 57 0) #0& ' 0) 57'&X #%37 4 0)X owning, holding and developing or disposing of property. /#; &1 #0& 57(('4 57%* 16*'4 #%65 #0& 6* 0)5 #5 1& '5 %14214#6' /#; lawfully do and suffer.
INTRODUCTION TO LLP11.3 Target groupsThe LLP may be formed by any business group to carry on any lawful business withthe view to make profit. However, the main targeted business groups are: Professionals (e.g Lawyers, Accountant & Company Secretaries) /#. #0& /'& 7/ 5 '& 75 0'55'5 1 06 8'0674'5 '0674' %#2 6#.51.4 Difference between an LLP and a General PartnershipThe LLP offers limited liability to its partners whereby any debts and obligationsof the LLP will be borne by the assets of the LLP. In the case of a conventional partnership, thepartners are jointly and severally liable with the firm.1.5 Difference between an LLP and a CompanyThere are many fundamental differences between an LLP and a company.Amongst others, the main differences are: No issuance of shares .': . 6; 0 /#- 0) &'% 5 105 1 (14/#. 4'37 4'/'06 61 %108'0' 007#. '0'4#. ''6 0)5 1 4'37 4'/'06 61 57 / 6 ( 0#0% #. 56#6'/'065 61 %%17065 0''& 016 ' #7& 6'&T3
1INTRODUCTION TO LLP1.6 Comparative chart between LLP and various other businessvehicles in MalaysiaCOMPANYLIMITED LIABILITYPARTNERSHIP ntributionShare capitalPartnerscontributionPartnerscontributionOwn contributionOwner(s) of thebusinessCompany(members / share- holders own ‘shares’in the company thatgive them certainrights in relation tothe Company)LLP (partners have ashare in the capitaland profits of theLLP)PartnersSole ProprietorSeparate legal entitySeparate legal entityNot a separate legalentityNot a separate legalentityParty that is liablefor debts of the busi- nessCompanyLLPPartnersSole ProprietorResponsibility formanagement ofbusinessBoard of DirectorsPartnersPartnersSole ProprietorPersonal liabilityNo personal liabilityof individual directoror shareholderNo personal liabilityof partner, except forown wrongful act oromission or withoutauthorityUnlimited liability(jointly andseverally liable withthe partnership)which can extend topersonal assets ofthe partnersUnlimited liabilitywhich can extend topersonal assets ofthe sole proprietor2 to 20 partners(Except forpartnerships forprofessional practicewith no maximumlimit)Sole proprietor onlyLegal StatusLiabilities borne bythe directors orshareholders are tothe extent of unpaidshares onlyNo. OfShareholders/Partners4Minimum 2 and max- imum 50 in privatecompanyLiabilities borne bythe partners arejointly and severallywith the LLP to theextent of unpaidshare capital onlyMinimum 2 and nomaximum limit
REGISTRATION OF LLP2.2REGISTRATION OF LLP2.1 Registration of a new LLPAn LLP may be registered by an application made to the Registrar by furnishingthe following information:(a) Name of the proposed LLP;(b) General nature of the proposed business of the LLP;(c) Proposed registered office of the LLP;(d) Name and details of every person who is to be a partner of the LLP;(e) Name and details of compliance officer(s) of the LLP;(f) If the LLP is formed for the purposes of carrying on any professional practice, theapplication shall be accompanied by an approval letter from the governing bodyas specified in the third column of the First Schedule of the LLP Act 2012; and(g) Such other relevant information as may be specified by the Registrar.2.2 Registration to be done by Compliance OfficerA registration of LLP is required to be done by the Compliance Officer appointedby the LLP.2.3 Conversion into a Limited Liability PartnershipAn application to convert from a conventional partnership or a private company into anLLP may be made to the Registrar by furnishing the following information:(a) From Conventional Partnership to LLP *' 0#/' #0& 4') 564#6 10 07/ '4 1( 6*' %108'06 10#. 2#460'45* 2Y *' ' 10 9* %* 6*' %108'06 10#. 2#460'45* 2 9#5 4') 56'4'& 70&'4 6*' Registration of Businesses Act 1956 or any other written law; *#6 #5 #6 6*' ' 1( 6*' #22. %#6 10X 6*' %108'06 10#. 2#460'45* 2 #22'#45 61 ' able to pay its debts as they become due in the normal course of business; and5
2REGISTRATION OF LLP . 16*'4 0(14/#6 10 4'37 4'& (14 6*' 4') 564#6 10 1( # 0'9 #5 56#6'& 0 paragraph 2.1 above.(b) From Private Company to LLP *' 0#/' #0& 4') 564#6 10 07/ '4 1( 6*' 24 8#6' %1/2#0;Y *' ' 10 9* %* 6*' 24 8#6' %1/2#0; 9#5 0%14214#6'& 70&'4 6*' %1/2#0 '5 Act 1965; *#6 #5 #6 6*' #22. %#6 10 'X 6*' 24 8#6' %1/2#0; #22'#45 61 ' # .' 61 2#; 65 debts as they become due in the normal course of business; *#6 #5 #6 6*' #22. %#6 10 'X #. 17656#0& 0) 56#67614; (''5 14 #0; #/1706 owing to any government agency has been settled; *#6 6*' 24 8#6' %1/2#0; *#5 2.#%'& #0 #&8'46 5'/'06 0 #6 .'#56 10' 9 &'.; % 4%7.#6'& 0'952#2'4 0 #.#;5 # #0& 27 . 5*'& # 016 ( %#6 10 0 6*' # '66' 1( 65 intention to convert to a limited liability partnership; and *#6 #. 1( 65 %4'& 6145 *#8' #)4''& 9 6* 6*' #22. %#6 10 61 %108'46 61 # . / 6'& liability partnership; and . 16*'4 0(14/#6 10 4'37 4'& (14 6*' 4') 564#6 10 1( # 0'9 #5 56#6'& 0 paragraph 2.1 above.(c) From Conventional Professional Firm to LLP for Professional Practice *' 0#/' #0& 4') 564#6 10 07/ '4 j ( #0;k 1( 6*' %108'06 10#. 241('55 10#. ( 4/ Y *' ' 10 9* %* 6*' %108'06 10#. 241('55 10#. ( 4/ 9#5 4') 56'4'& 70&'4 6*' relevant law; *#6 #5 #6 6*' ' 1( 6*' #22. %#6 10X 6*' %108'06 10#. 241('55 10#. ( 4/ #22'#45 to be able to pay its debts as they become due in the normal course of business; .'66'4 1( #22418#. 14 .'66'4 1( 01 1 ,'%6 10 (41/ 6*' 4'.'8#06 )18'40 0) 1&; #5specified in the third column of the First Schedule of the LLP Act 2012; and . 16*'4 0(14/#6 10 4'37 4'& (14 6*' 4') 564#6 10 1( # 0'9 #5 56#6'& 0 paragraph 2.1 above.2.4 Registration feeThe registration fee for the registration of a new LLP or for the conversion intoan LLP is RM500.6
REGISTRATION OF LLP22.5 Limited Liability Partnership AgreementThe mutual rights and duties of the partners of an LLP and the mutual rights and dutiesof the LLP shall be governed by the LLP agreement. However, in the absence ofagreement as to any matter set out in the Second Schedule of the LLP Act 2012,provisions of the Second Schedule relating to that matter shall apply.2.6 Compliance OfficerEvery LLP must appoint at least one compliance officer who shall be: ' 6*'4 10' 1( 6*' 2#460'45 14 # 2'4510 9*1 5 37#. ( '& 61 #%6 #5 # 5'%4'6#4; 70&'4 the Companies Act 1965; #6 .'#56 EL ;'#45 1( #)' #0& % 6 '0f2'4/#0'06 4'5 &'06 1( #.#;5 #Y #0& 14& 0#4 .; 4'5 &'5 0 #.#;5 #T2.7 Registration as a compliance officer of an LLPOnce a person is appointed as a compliance officer of an LLP, he must register with theRegistrar so as to enable him to lodge or submit documents on behalf of the partners or theLLP.The registration shall be done via the MyLLP Portal and the compliance officer isrequired to go to the nearest SSM office for identity verification purposes.2.8 Duties and Liabilities of Compliance OfficerA compliance officer shall be responsible for the doing of all acts, matters and thingsas required to be done under the LLP Act 2012 and the Limited Liability PartnershipsRegulations 2012 (‘LLP Regulations 2012’) as follows: 1&) 0) 14 57 / 66 0) 1( &1%7/'065 10 '*#.( 1( 6*' 2#460'45 14 6*' #5 56#6'& in Regulation 6 of the LLP Regulations 2012; ') 56'4 0) %*#0)'5 0 4') 56'4'& 2#46 %7.#45 1( 6*' 9 6* 6*' ') 564#4 #5 #0& when it occurs as required under section 17 of the LLP Act 2012; ''2 0) 1( 4') 56'45 #0& 56#67614; &1%7/'065 #6 6*' 4') 56'4'& 1(( %' 1( 6*' #5 required under section 19 of the LLP Act 2012; 7 . 5* 0) 6*' 5 0#/' #0& 6*' 4') 564#6 10 07/ '4 1765 &' 65 4') 56'4'& 1(( %' and place of business as required under section 20 of the LLP Act 2012; and 0; 16*'4 /#66'45 6*#6 /#; ' 4'37 4'& 61 ' &10' ; 6*' ') 564#4 1( (41/ time to time under the LLP Act 2012 and/or LLP Regulations 2012.7
3CONTINUOUS OBLIGATION OF LLP3.CONTINUOUS OBLIGATION OF LLP3.1 Registration of changes in particularsAn LLP shall ensure to lodge a notification to the Registrar if any changes made oroccurs in the registered particulars of the LLP within fourteen days from the date of which thechanges made or occurred.3.2 Keeping of Registers and Statutory RecordAn LLP shall keep at all times at the registered office the following:(i)a notice of registration issued by the Registrar of LLP;(ii)a register of the name and address of each partner and compliance officer;(iii)a copy of the most recent annual declaration;(iv)a copy of any statement lodged with the Registrar under the LLP Act 2012;(v)a copy of certificate (if any), issued by the Registrar under section 11(4) LLPAct 2012;(vi)a copy of the LLP agreement and any amendment thereto;(vii) a copy of any instrument relating to any charge created by the LLP; and(viii) any other documents that the Registrar may, from time to time, requireto be kept by an LLP.3.3 Keeping of Accounting Records(i) An LLP shall keep such accounting and other records as will sufficiently explainthe transactions and financial position of the LLP and enable profit and lossaccounts and prepare balance sheets from time to time which give a true andfair view of the state of affairs of the LLP at the LLP registered office or such otherplace as the partner thinks fit provided that a notification of that place been madeto the Registrar;(ii) An LLP shall retain the accounting records and other records as above for aperiod of not less than seven years from the end of financial year in which thetransactions or operations to which those records relate are completed.8
FREQUENTLY ASKED QUESTIONS43.4 Annual Declaration(i) An LLP shall ensure to lodge with the Registrar on an annual basis withinninety days from the end of the financial year of the LLP, a declarationmade by any two of its partners that the LLP is able or not able to pay its debtsas they become due in the normal course of business and the declaration shallbe accompanied by such other particulars as may be required by the Registrar.(ii) In the case of the first annual declaration, it shall be lodged not later thaneighteen months from the date of the registration of the LLP4.FREQUENTLY ASKED QUESTIONS4.1 Fundamentals of LLPWhy LLP in Malaysia? To provide the business community with an alternative business vehicle tocomplement the traditional choices of sole proprietorships, partnerships andcompanies (local and foreign) 1 2418 &' #%%'55 61 . / 6'& . # . 6; 56#675 (14 2#460'45* 2 6;2' 75 0'55'5 14' #((14&# .' 75 0'55 8'* %.'What is the legal status of an LLP?An LLP is a separate entity wi
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 are jointly and severally liable with the firm. 1.5 Difference between an LLP and a Company There are many fundamental differences between an LLP and a company.
