limited liability partnership (llp)
WHAT IS IT?
Limited Liability Partnership (LLP) is an alternative business vehicle regulated under the Limited Liability Partnerships Act 2012 which combines the characteristics of a company and a conventional partnership.
WHO IS IT FOR?
The LLP business structure is designed for all lawful business purposes with a view to make profit. The LLP concept also support start-ups, small and medium enterprises (SMEs) to grow their businesses without having to worry too much of their personal liabilities, personal assets and strict compliance requirements.
WHAT ARE THE ADVANTAGES OF LLP?
Amongst others, LLP is featured with the protection of limited liability to its partners similar to the limited liability enjoyed by shareholders of a private limited company (Sdn Bhd) coupled with flexibility of internal business regulation through partnership arrangement similar to a conventional partnership.
Any debts and obligations of the LLP will be borne by the assets of the LLP and not that of its partners. A 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.
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. With the introduction of LLP, entrepreneurs will have more options to choose the most preferred form of business vehicle.
LLP is a common concept in many developed countries.
I HAVE AN EXISTING COMPANY, MAY I CONVERT TO LLP?
Yes, conventional partnerships and private limited companies (Sdn Bhd) are allowed to convert to LLP. A word of caution is that once a Sdn Bhd has been converted to LLP, it will not be able to re-convert to Sdn Bhd. Listed below are the criteria for converting to LLP:-
Conventional partnership to LLP
- Partners remain the same after conversion
- At the date of application, the conventional partnership is solvent.
- In cases of professional practice an approval letter from the governing body.
Private limited company (Sdn Bhd) to LLP
- Shareholders remain the same after conversion
- There is no subsisting security interests in its assets.
- At the date of application, the private company is solvent.
- All outstanding statutory fees to government agencies has been settled.
- All creditors agree to the conversion.
WHAT HAPPENS WHEN I CONVERT TO LLP?
- All assets previously held by the conventional partnership/ Sdn Bhd will be transferred to the LLP.
- All pending proceedings may be continued, completed and enforced against or by the LLP.
- Existing agreements, contracts shall have effect as though the LLP were a party.
- In the case of a conversion from a conventional partnership to LLP, the partners of the conventional partnership shall continue to be personally liable (jointly and severally with the LLP) for liabilities and obligations incurred prior to the conversion.
- In the case of a conversion from a Sdn Bhd to LLP, the Sdn Bhd will continue to be liable for liabilities and obligations incurred prior to the conversion. After the conversion, the Sdn Bhd shall be deemed to have been dissolved.
CAN A FOREIGN LLP BE REGISTERED?
Yes, a Foreign LLP can be registered in Malaysia by lodging the following documents with the Companies Commission of Malaysia.
Have any further questions or need more details? Please refer to our FAQ or Contact Us!
llp compliance matters
LLP complies to less stringent compliance matters compared to a private limited company (Sdn Bhd). Set out below are the few compliance matters of a LLP:-
COMPLIANCE OFFICER Under the LLP Act 2012 there is a requirement for LLP to appoint at least one compliance officer. 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 is a citizen or permanent resident of Malaysia and ordinarily resides in Malaysia.
The main responsibilities of a compliance officer are:-
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.
REGISTERED OFFICE The LLP Act 2012 further provides that a LLP is required to have a registered office in Malaysia to which all communications and notices may be addressed.
ANNUAL DECLARATION LLP is required to lodge an Annual Declaration with the Registrar stating whether the LLP is able or unable to pay its debts.
RISS' trusted advisors will be to assist you in the above to ensure that you do not miss your deadlines. Kindly Contact Us to obtain a quote.
- Appointment of Compliance Officer
- Maintenance of a Registered Office and Statutory Records of the LLP
- Preparation of Annual Declaration
COMPLIANCE OFFICER Under the LLP Act 2012 there is a requirement for LLP to appoint at least one compliance officer. 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 is a citizen or permanent resident of Malaysia and ordinarily resides in Malaysia.
The main responsibilities of a compliance officer are:-
- 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.
REGISTERED OFFICE The LLP Act 2012 further provides that a LLP is required to have a registered office in Malaysia to which all communications and notices may be addressed.
ANNUAL DECLARATION LLP is required to lodge an Annual Declaration with the Registrar stating whether the LLP is able or unable to pay its debts.
RISS' trusted advisors will be to assist you in the above to ensure that you do not miss your deadlines. Kindly Contact Us to obtain a quote.
tax treatment for llp
LLP will be treated like a private limited company (Sdn Bhd) with similar preferential tax treatment on the first RM500,000 of the chargeable income. LLP is also required to furnish estimate tax payable and payment of tax instalment like a Sdn Bhd. Malaysia's corporate tax rate is as follows:-
LLPs with capital contribution of not more than RM2.5 million
On first RM500,000 - 20%
Subsequent Balance - 25%
LLPs with capital contribution of more than RM2.5 million
- 25%
LLPs with capital contribution of not more than RM2.5 million
On first RM500,000 - 20%
Subsequent Balance - 25%
LLPs with capital contribution of more than RM2.5 million
- 25%