Limited Liability Partnership (LLP) offers entrepreneurs in Malaysia a flexible business structure with reduced personal liability. Registering an LLP is crucial for individuals looking to establish a business entity in the country. This guide provides a comprehensive overview of the LLP incorporation process, from understanding the basics to the LLP registration procedure.
Understanding LLP Malaysia
Before delving into LLP registration, it's crucial to understand the basics of the LLP business structure in Malaysia. The LLP structure combines the advantages of limited liability protection with the flexibility of a partnership, providing partners with a shield against personal liability while maintaining a simplified administrative process. For more information, refer to Choosing the Right Business Structure: Sdn Bhd vs LLP Explained.Â
7 Key Things You Must Know About LLP Registration
If you're considering forming a Limited Liability Partnership in Malaysia, it's crucial to understand the key aspects of the registration process. LLPs offer a flexible business structure with distinct advantages, but there are essential details you need to know to ensure a smooth LLP setup. Here are 7 key things you must know about LLP registration.
a. The LLP Name
The first step in registering an LLP in Malaysia is to receive LLP name approval from the Suruhanjaya Syarikat Malaysia (SSM) for the proposed name of your LLP. This involves conducting a name search to ensure that the chosen name is unique and complies with SSM-Guidelines on Limited Liability Partnership Names. The approval process helps to prevent the duplication of business names and ensures that your LLP name is distinct and identifiable.
b. Number of Partners
The LLP setup must have at least two partners, either individuals or corporate entities, whether local or foreign. There is no upper limit on the number of LLP partners, providing flexibility for growth and expansion. Unlike other business structures, the partners do not need their residency address in Malaysia, making it an attractive option for international business collaborations and foreign investors.
c. The Compliance Officer
According to SSM guidelines for LLP Registration Requirements, all LLPs must appoint at least one compliance officer. This individual must be either one of the LLP partners or a person qualified to act as a company secretary. A compliance officer in an LLP is responsible for ensuring adherence to the LLP Act 2012 and the Limited Liability Partnerships Regulations 2012. Key duties include lodging or submitting documents on behalf of the partners or the LLP, registering changes in the LLP's particulars with the Registrar, maintaining registers and statutory documents at the registered office, and displaying the LLP’s name and registration number at its registered office and place of business.
Additionally, the compliance officer must address any other requirements mandated by the LLP's registrar, ensuring the LLP remains compliant with all legal and regulatory obligations. Furthermore, the compliance officer of an LLP assumes personal liability for all penalties, including administrative sanctions, unless proven otherwise. The compliance officer must also be a citizen or permanent resident of Malaysia and ordinarily reside in the country. This ensures the compliance officer is readily available to manage legal and administrative matters related to the LLP.
d. LLP Registered Office Address
Every LLP must have a registered address in Malaysia, which serves as the official correspondence address for legal and regulatory matters. This registered office address is typically the compliance officer’s address, ensuring that important documents and notices are received and managed appropriately. The registered address must be a physical location in Malaysia and cannot be a P.O. Box.
e. LLP Business Address
In addition to its registered address, the LLP must provide the address of its principal place of business. This is the location where the LLP conducts its primary business activities. If the principal place of business differs from the registered address, it should be specified accordingly. The LLP should use its own business address to maintain clarity and consistency in business operations and communications.
f. LLP Agreements
An LLP agreement in Malaysia is a foundational document that outlines the terms and conditions under which a Limited Liability Partnership business in Malaysia operates. This agreement specifies the business objectives, capital contributions, profit-sharing ratios, management structure, and decision-making processes. It also includes mechanisms for dispute resolution, procedures for admitting new partners, LLP partnership termination, and LLP guidelines for dissolving the LLP.
The LLP partnership agreement provisions ensure smooth operation and minimise conflicts by clearly defining each partner's roles, rights, and responsibilities. It provides a flexible yet structured framework, allowing partners to tailor the governance and operational aspects of the LLP to their specific needs and objectives.
g. LLP Partner Rights and Duties
The LLP partner rights and duties in a Limited Liability Partnership (LLP) are crucial for its successful operation and are typically detailed in the LLP partnership agreement provisions. Partners have the right to participate in LLP partnership management, LLP partnership profit sharing, and access to the LLP’s financial records, ensuring transparency and involvement in decision-making.
They are also indemnified for liabilities incurred in good faith while conducting LLP business. On the LLP partner duties side, partners must act in the LLP’s best interests, performing their roles with due care and diligence. They must comply with all legal and regulatory requirements, including maintaining proper records and filing necessary documents. Additionally, partners must uphold fiduciary duties, acting honestly and prioritising the LLP’s interests over personal gain.
4 Key Steps To Register Your LLP Business In Malaysia
Registering your LLP business in Malaysia involves four key steps. These steps guide you through the process, ensuring compliance and setting the foundation for your venture's success.
Step 1: Choose an LLP Name Search for LLP Incorporation
MyLLP portal is the first step in registering an LLP business in Malaysia. You must begin by conducting an LLP name search and reservation through the Suruhanjaya Syarikat Malaysia (SSM).
For first-time LLP registration with SSM, you can visit this page: Here
If you have had an account with SSM before, you can visit this page: Here
Step 2: Filling Up The LLP Details
Once your LLP name is approved, fill in the necessary details. This includes the LLP name, nature of business, registered and business addresses, partner details, compliance officer details, and required approval letters. For more information, refer to General Guidelines for Registration of Limited Liability Partnership and Related Matters.
Step 3: Declare and Pay the LLP Registration Fee
Please review all information carefully, declare its accuracy, and pay the RM500 LLP registration fee. If there is no issue, Suruhanjaya Syarikat Malaysia (SSM) will review your application. It will take a couple of days.
Step 4: Post-Registration Obligations
After registration, you must ensure LLP compliance with all post-LLP registration requirements, such as filing annual returns and maintaining proper LLP accounting records, to keep your LLP business in good standing.
You can visit e-Daftar to apply online to register income tax files for a limited liability partnership in Malaysia. Refer to the screenshot below for e-services for the LLP category.
According to LLP taxation registration by LHDN, limited liability partnerships must register and submit Form E from the year of assessment 2014 onwards. For more information, refer to LHDN tax file registration.
The LLP would need to submit the required document for tax registration below:
Conclusion
In conclusion, registering a Limited Liability Partnership in Malaysia is a strategic choice for many entrepreneurs due to its flexible structure and limited liability benefits. This step-by-step guide provides a comprehensive pathway for a successful LLP formation, from the initial preparation and meeting eligibility requirements to submitting necessary documentation and fulfilling post-registration obligations. By adhering to these steps, businesses can ensure compliance with Malaysian laws and regulations, setting a solid foundation for future operations.
Understanding the detailed process of LLP registration, including the importance of a well-drafted LLP agreement and LLP partner rights and duties, is crucial for minimising potential conflicts and maximising operational efficiency. As you embark on this journey, meticulous planning and attention to legal requirements will pave the way for a successful legal business venture in Malaysia's dynamic market environment.
