Guide to Establishing A Limited Liability Partnership (LLP) in Malaysia

Establishing a Limited Liability Partnership (LLP) in Malaysia is a suitable option for entrepreneurs and professionals seeking a business structure that combines the flexibility of a partnership with the legal protections of a corporation.

If you are planning to set up an LLP in Malaysia, this article will provide you with the necessary information including benefits, requirements, and registration process.

What is a Limited Liability Partnership (LLP) in Malaysia?

A Limited Liability Partnership combines the features of a partnership and a corporation with limited liability protection for its partners. There are no minimum paid capital requirements for an LLP, but partners are required to make capital contributions in cash or assets. This capital contribution must align with the agreement made between partners and meet the LLP’s financial needs.

An LLP structure is appealing due to its flexibility and reduced compliance requirements compared to a private limited company (Sdn. Bhd.) which requires a formal management structure and extensive record-keeping for regulatory filings.

Skilled professionals like lawyers, consultants, and accountants often utilize this business structure. However, keep in mind that any LLP formed for professional practices must secure approval from relevant governing bodies and partners must belong to the respective professions.

Learn more about other business entities in Malaysia here.

Benefits of a Limited Liability Partnership in Malaysia

A Limited Liability Partnership offers a myriad of benefits for foreign business owners looking to expand their business in Malaysia which includes:

• Limited Liability Protection: Partners in an LLP enjoy limited liability. This protects their personal assets from the business’s debts and liabilities.
• Separate Legal Entity: An LLP is considered a separate legal entity, allowing it to own property and enter into contracts independently. This provides more security and operational flexibility.
• Tax Benefits: LLPs are taxed at the entity level rather than to individual partners. Profits distributed from an LLP are exempt from further taxation at the partner level, which protects partners from double taxation. LLPs also offer a lower tax rate on chargeable income than conventional partnerships.
• Flexibility in Management: Partners can negotiate their roles and responsibilities. This allows for a flexible operational structure and management of the company.
• Ease of Registration and Compliance: A Limited Liability Partnership has fewer compliance requirements than a private limited company. The company registration process is rather straightforward.

Can Foreigners Own a Limited Liability Partnership (LLP) in Malaysia?

As per Malaysian regulations, foreigners can have 100% ownership of an LLP in Malaysia. However, they must appoint at least one qualified compliance officer who is a Malaysian or a permanent resident. This is to ensure adherence to local regulations such as filing income tax returns and keeping accurate records as specified by the Companies Commission of Malaysia (SSM).

If needed, Emerhub’s business incorporation experts will assist in appointing a qualified compliance officer for your Limited Liability Partnership in Malaysia.

Key Requirements for a Limited Liability Partnership (LLP) in Malaysia

To set up a Limited Liability Partnership in Malaysia, it is important to adhere to the following requirements for a smooth incorporation process:

• Minimum of 2 partners.
• An LLP Agreement which outlines the relationship between partners.
• Registered office address in Malaysia.
• Copies of identification documents for all partners.
• The name of the LLP, must end with ‘Perkongsian Liabiliti Terhad’ or its abbreviation PLT.
• A Compliance Officer who is either a partner or someone qualified to act as secretary under the Companies Act 2016. He must also be a citizen or permanent resident of Malaysia.

Our local experts will prepare the necessary documents such as the partnership agreement and assist with meeting other requirements to ensure timely approval.

Registration Process for a Limited Liability Partnership

Here is the step-by-step process to register your Limited Liability Partnership in Malaysia:

1. Choosing an LLP Name

When setting up your LLP in Malaysia, the first step is to choose the appropriate name in compliance with SSM guidelines. Our local experts will check for the availability of your preferred name with SSM and reserve it on your behalf.

2. Gather Documents

After name approval and reservation, prepare the documentation outlined in the requirements above. These include the LLP Agreement,  identification documents, and more. 

3. Appoint A Compliance Officer for Your LLP

During the registration process, it is mandatory to provide information on your local compliance officer. This compliance officer will be responsible for ensuring compliance with local regulations. If no compliance officer is appointed by the LLP, the responsibility to ensure tax compliance and others will fall jointly on all partners under Section 75B of the Income Tax Act.

4. Application Submission to SSM

Once everything is in order, the next step is to submit your application to SSM and pay the registration fee of RM 500 for Limited Liability Partnerships. The SSM will review your application and provide confirmation within 15 working days, depending on the completeness of the application.

Post Registration Compliance for Your Malaysian LLP

After registering your Limited Liability Partnership in Malaysia, a crucial part is staying compliant with the local laws and regulations which allows your business to operate smoothly. 

• Annual Declarations to SSM: LLPs must submit annual declarations to SSM to maintain financial transparency. Moreover, the LLP must maintain proper accounting records of financial transactions for at least 7 years. They must report any changes in partnership structure to SSM.
• Tax Compliance: Limited Liability Partnerships must comply with Malaysian tax laws and file annual tax returns based on their individual partner’s share of profits.

Emerhub makes it easy for entrepreneurs and investors to start their business operations in Malaysia by handling the company registration process on their behalf. Our business incorporation experts will assist you in preparing the necessary documentation and liaise with the local authorities.

Post registration, our experts will maintain accounting records and ensure tax compliance in accordance with local laws to avoid penalties and legal issues.

For more details, fill out the form below and our local business advisors will get in touch with you.