Getting information on the net can be hard sometimes, especially when your searches seem to land you onto pages with bits of information here and there. Here’s a comprehensive guide on how to set a limited liability partnership (“LLP”) up in Malaysia.
What is a Limited Liability Partnership (LLP)?
It’s an alternative business vehicle which combines the characteristics of both a company and a conventional partnership. It provides limited liability status to its partners and offers the flexibility of internal arrangement through an agreement between the partners. This LLP vehicle was introduced in Malaysia in 2013.
A Limited Liability Partnership is governed by Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia) and Limited Liability Partnerships Act 2012.
Key Characteristics of an Limited Liability Partnership (LLP)
|Partners contribution||Capital Contribution||Partners contribution|
|LLP (partners have a share in the capital and profits of the LLP)||Owner(s) of the business||Partners|
|Separate legal entity||Legal Status||Not a separate legal entity|
|LLP||Party that is liable for debts of the business||Partners|
|Partners||Responsibility for management of business||Partners|
|No personal liability of partner, except for own wrongful act or omission or without authority||Personal liabillity||Unlimited liability (jointly and severally liable with the partnership), which can extend to personal assets of partners|
|Minimum 2, and no maximum limit||No. of partners||2 to 20 partners (except for partnerships for professional practice with no maximum limit)|
A limited liability partnership is better than a conventional partnership because it provides limited liability protection to its partners, similar to the limited liability enjoyed by a shareholder of a company. This business vehicle also provides the flexibility of internal business rules through partnership arrangements similar to a conventional partnership.
Any debt and liabilities of LLP shall be borne and paid out of the property of the LLP and not from the property of its partners. LLP has the legal status of a corporation that can sue and sued in the name of the LLP itself, owns an asset in its name and does all other lawful matters in the same name as a corporation of another organization.
LLP also offers flexibility in terms of setting up, maintenance and termination and has dynamic features and attractions to compete domestically and internationally. With the introduction of LLP, entrepreneurs will have more business venues to choose from based on their needs or requirements.
What are the requirements to register a Limited Liability Partnership (LLP)?
You’ll need to prepare 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 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 LLP Act 2012; and
- RM500 for the registration fee.
Who should register for a Limited Liability Partnership (LLP)?
The LLP business structure is designed for all lawful business purposes with a view to make profit. Usually, they are formed by professionals for the purpose of carrying on their professional practice, start ups, or small and medium enterprises (SMEs) to grow their businesses without having to worry too much on their personal liabilities, personal assets and strict compliance requirements.
How to start a Limited Liability Partnership (LLP) in Malaysia?
Step 1: Register an account on the SSM4U
First, create an account on SSM4U.
Click on the “Register” button. You will be directed to a page where you will be required to fill up account information, contact information, business info (optional), and confirm to their Terms & Conditions Agreement.
Upon successful registration, you’ll receive an email with a system generated password. This password can be changed on their portal. Congrats! You now have an account with them, and have access to their portal.
I was shocked to find that this account set-up, according to their terms and conditions agreement, was actually a subscription service. You, the user will be a subscriber. Furthermore, by agreeing, you are agreeing to a annual subscription fee of RM120, or as otherwise determined by the Registrar of Companies.
Step 2: Head down to your nearest SSM branch to get your ID verified
You now have access to the portal, but if you click on “MyLLP”, you will be directed to an “Access Denied” page. This is happening because you have yet to verify your ID with SSM.
If you noticed in the email earlier with the system generated password, there’s a note below, telling you that for MBRS and MyLLP users, you are required to go to the nearest SSM office for ID verification. Remember to bring along either your MyKad, MyPR, MyKAS or passport.
For me, I got my ID verified at their head office at Menara SSM:
No 7, Jalan Stesen Sentral 5
Kuala Lumpur Sentral, 50623 Kuala Lumpur
Head up to Level 17, take a number, give them your IC, verify using your thumbprint and you are good to go. The whole process took less than 5 minutes.
Once you have verified your ID physically at your nearest SSM office, you’ll receive a confirmation e-mail stating successful ID validation at SSM’s counter. After you’ve gotten that e-mail confirmation, you’ll be able to access the MyLLP portal.
Step 3: Start a new application, fill up the necessary details, and pay the RM500 fee online!
Log in to the SSM4U portal again, and click on “MyLLP”. You should be able to access the MyLLP portal now.
Hover on the menu bar, and go to “Starting a LLP”, and click on “Direct Registration”.
Thereafter, you will be directed to a page requesting for information such as:
- Proposed Name – You can check for the name for your LLP here, plus any clarification for faster approval.
- LLP Details – Input registered address, contact information and business address information (if any).
- Business Code and Description – You will need to put your business code according to this list, and business description.
- Compliance Officer Details – By default, it will be auto-populated to be yourself. You can also add another compliance officer if required.
- Partner Details – You will need to add at least another partner here (other than yourself), including the partner’s relevant personal information.
- Supporting Documents – If any (e.g. consent letter to use a trademark, etc.)
Once you have verified all the information is stated are true, you may proceed to pay the RM500 at the “Fee and Declaration” tab. A payment confirmation e-mail will be sent to your e-mail upon successful payment.
It is an offence under Section 80 of the Limited Liability Partnerships Act 2012 to dishonestly make or authorize the making of a statement that you know is false or misleading and you may be liable, upon conviction, to imprisonment for a term not exceeding five years or to a fine not less than RM150,000 and not more than RM500,000 or to both.
You will also get another email notification telling you that your LLP has been registered. Congrats! You are now a proud owner of a LLP!
Step 4: Log in and purchase your certificates online
Purchase your Certificate of Registration on the MyLLP portal.
What subsequent obligations should you be aware of for a Limited Liability Partnership (LLP)?
Did you know that after setting up a Limited Liability Partnership (LLP), there are continuous obligations that you need to be aware of?
Registration of changes in particulars
An LLP shall ensure to lodge a notification to SSM for any changes made or occurs in the registered particulars of the LLP within 14 days from the date of which the changes made or occurred.
In the case where a LLP fails to register change in particulars with CCM within 14 days, the LLP commits an offence and shall be liable to a fine not exceeding RM10,000 and a further default fine of not exceeding RM500 each day if the offence continues after convictions.
Keeping of Registers and Statutory Record
An LLP shall keep at all times at the registered office the followings:
- Notice of registration issued by the Registrar of LLP;
- Register of the name and address of each partner and compliance officer;
- A copy of the most recent annual declaration;
- A copy of any statement lodged with the Registrar under the LLP Act 2012;
- A copy of certificate (if any), issued by the Registrar under section 11(4) LLP Act 2012;
- A copy of the LLP agreement and any amendment thereto;
- A copy of any instrument relating to any charge created by the LLP; and
- Any other documents that the Registrar may, from time to time, require to be kept by an LLP.
In the case where a LLP fails to keep Registers and Statutory Records at Registered Office, the LLP commits an offence and shall be liable to a fine not exceeding RM10,000 and a further default fine of not exceeding RM500 each day if the offence continues after convictions.
Keeping of Accounting Records
An LLP must also keep accounting records and any other records to sufficiently explain the transactions and financial position of the LLP, as well as preparation of profit and loss accounts and balance sheets accounts that gives a true and fair view of the state of affairs of the LLP. These records must be kept at the LLP registered office or such other place as the partner thinks fit provided that a notification of that place been made to the Registrar.
An LLP shall retain the accounting records and other records as above for a period of not less than 7 years from the end of financial year in which the transactions or operations to which those records relate are completed.
In the case where a LLP fails to keep Accounting Records at Registered Office or other place, the LLP and every partners commits an offence and shall be liable to a fine not exceeding RM50,000 or imprisonment for a term not exceeding 6 months or both.
In the case where a LLP fails to keep Accounting Records for a period of 7 years, the LLP and every partners commits an offence and shall be liable to a fine not exceeding RM10,000 and a further default fine of not exceeding RM500 each day if the offence continues after conviction.
An LLP shall ensure to lodge with CCM on an annual basis within ninety days from the end of the financial year of the LLP, a declaration made by any two of its partners that the LLP is able or not able to pay its debts as they become due in the normal course of business and the declaration shall be accompanied by such other particulars as may be required by the Registrar.
In the case of the first annual declaration, it shall be lodged not later than 18 months from the registration of LLP or 90 days from the financial year end, whichever is earlier.
In the case where a LLP fails to lodge Annual Declaration to CCM within ninety days, the LLP commits an offence and shall liable to a fine not exceeding RM20,000 and a further default fine of not exceeding RM500 each day if the offence continues after convictions.
You will also need to register for a tax file, do your yearly tax filing, and submission of estimate of tax payable and tax payments (if any).
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|Disclaimer: The above is solely the author’s point of view. Our content is intended to be used for informational purposes only. It is very important to do your own analysis before making any tax decisions / investment based on your own personal circumstance. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise.|