Establishing a Limited Liability Partnership (LLP) in Malaysia

If you are setting up with partners in Malaysia rather than shareholders, the Limited Liability Partnership (LLP) is usually the structure you want. 

It is commonly used by professional firms, advisory practices, and joint ventures. In each of those, everyone involved brings a distinct role rather than passive capital.

Understanding Limited Liability Partnerships (LLPs) in Malaysia

In Malaysia, Limited Liability Partnerships are called a Perkongsian Liabiliti Terhad, which is why they use the “PLT” suffix in their registered names. They are regulated under the Limited Liability Partnerships Act 2012. 

Once registered with the Companies Commission of Malaysia (SSM), the LLP becomes a corporate body separate from its partners. You can then sign contracts, own assets, and take on obligations in its own name.

The main advantage is operational flexibility. Rather than working through a rigid shareholder structure, you use an LLP agreement with your partners to decide how you will run the business. Other key benefits include:

• Protection from business liabilities: The LLP is generally responsible for its own debts and obligations. A partner remains personally responsible for their own wrongful act or omission.
• Terms that suit the partnership: Partners can agree their capital contributions, profit shares, management roles, voting rights, and signing authority.
• Tax paid at LLP level: The LLP generally pays Malaysian tax on its own profits. This differs from some jurisdictions where LLP income is taxed directly in the hands of each partner, even when the business keeps the profits to fund its operations.
• Continuity for the business: Unlike a conventional partnership, the LLP continues to exist when a partner leaves, retires, or dies. This is subject to the LLP agreement and applicable legal requirements.
• A clear plan for change: The LLP agreement can set the process for admitting new partners, transferring an interest, resolving disputes, or dissolving the partnership.

Can Foreigners Own an LLP in Malaysia?

Foreigners can hold 100% ownership in a Malaysian LLP, provided the business operates in a general commercial sector.

Section 6 of the LLP Act 2012 requires two or more persons to form an LLP, and a partner can be an individual or a corporate entity. Neither has to be Malaysian. Therefore, two foreign individuals, two foreign companies, or any combination of the two can register an LLP together. 

This flexibility is what draws foreign-owned consultancies, tech firms, and joint ventures to the LLP structure. However, you’ll need to navigate two key constraints.

You must appoint a resident compliance officer

Every LLP needs at least one compliance officer, and this is where most fully foreign-owned partnerships need local representation. SSM won't accept your registration unless the officer is a Malaysian citizen or permanent resident who ordinarily lives here. 

If all your partners are based overseas, none of them qualifies. This is where a qualified company secretary such as Emerhub can step in to fill this role and help you meet this requirement.

Regulated professions have their own rules

If you are practising a regulated profession such as legal advisory, accountancy, or healthcare, sector-specific law takes precedence over the LLP Act.  These laws can cap foreign ownership, require professional qualifications or local participation, and restrict the services you provide. 

A wholly foreign-owned law firm, for example, can operate as a Qualified Foreign Law Firm under Section 40G of the Legal Profession Act 1976. Even then, it is confined to foreign and international law and cannot practice Malaysian law without a local partner holding 70% of the LLP. Restrictions like these vary widely from one regulated sector to another.

Therefore, it is advisable to consult local experts on whether your business line falls within a regulated sector and carries ownership restrictions. Our team can verify eligibility requirements as per your planned operations and handle the registration on your behalf.

Key Requirements for LLP Registration

Before you submit your registration, you must have your partners, local contacts, and structural details organized. Here is what you need to register an LLP in Malaysia:

• At least two partners: You need a minimum of two partners to register and maintain an active LLP. Partners can be individuals, corporate entities, or a combination of both.
• A Malaysian-resident compliance officer: You must appoint a compliance officer as your official liaison with SSM and the tax office. They can be a partner or a qualified company secretary. They must also be a Malaysian citizen or permanent resident who ordinarily resides in Malaysia.
• A physical registered office in Malaysia: Your LLP needs a physical local address to receive official notices and store statutory documents. Postal boxes don’t qualify because you must keep your partner and beneficial ownership registers at this location.
• MSIC activity codes: You must select up to three 5-digit Malaysia Standard Industrial Classification (MSIC) codes that match your intended operations. Banks and municipal councils use these to evaluate your account opening and trade permits.
• Capital contribution declaration: You must declare the agreed capital contribution for each partner. While there is no minimum paid-up capital, foreign-owned firms sponsoring expatriate Employment Passes must meet capital thresholds between RM 500,000 (~USD 120,000) and RM 1,000,000 (~USD 250,000) with the Expatriate Services Division (ESD).
• Beneficial ownership details: You must identify all natural persons who ultimately own or control 20% or more of the enterprise. If an overseas company is a partner, you must trace and disclose the living individuals behind that corporate parent.
• Professional body clearance (if applicable): If you are launching a regulated practice, you must secure an approval letter from the relevant professional governing body before filing. General commercial, tech, and consulting ventures don’t need this clearance.
• Foreign corporate records (if applicable): Applies when you have a foreign company as a partner. You must provide certified copies of its certificate of incorporation, corporate charter, and an official board resolution authorizing the Malaysian partnership.

The LLP Registration Process in Malaysia 

Malaysia LLP registration is completed online through SSM’s MyLLP system. However, the submission can only move forward once you have appointed a resident compliance officer and agreed on the LLP’s internal terms. Most of the preparation occurs well before you lodge the application, which Emerhub can help you manage end-to-end:

1. Reserve proposed company name

Your LLP name must end with either “Perkongsian Liabiliti Terhad” or “PLT.” For example, “Malaysia Growth Advisory PLT” uses the correct legal suffix. You can run your preferred name through our Malaysia Company Search tool to check if it's already taken or too close to an existing registration.

SSM will reject names that are similar to existing PLTs, misleading, or tied to a regulated activity you haven't cleared. Therefore, we recommend avoiding words linked to financial services, education, law, insurance, or architecture unless you actually hold the relevant approval.

If you're registering an existing foreign LLP in Malaysia rather than forming a new one, you must use its foreign registered name. The only exception is if SSM rejects that name for conflicting with an existing PLT or breaching its naming rules. In this case, you'll register a local alternative instead.

Once SSM approves your name, it stays reserved for 30 days, and you need to complete your LLP registration within that window or the reservation lapses.

2. Appoint a resident compliance officer and draft the LLP agreement

With your compliance officer confirmed, we will structure your LLP agreement to reflect how you plan to run the business. This must cover:

• Each partner's capital contribution
• Profit-sharing arrangements
• Management responsibilities and decision-making rights
• Authority to sign contracts or operate bank accounts
• Admission, retirement, or removal of partners
• Exit rights and dispute-resolution procedures

Once these details are ready, the appointed compliance officer lodges the registration particulars through the MyLLP system on your behalf. 

3. Obtain the Notice of Registration

SSM typically processes a complete LLP application within a few working days and issues a notice of registration once it approves your filing. This document is your proof that the LLP legally exists as a registered Malaysian entity, and you'll need it as the reference point for almost everything that follows. 

You’ll need to secure the following approvals before you open for business. These may stretch your overall timeline to several months, especially for regulated services:

• Sector or ministry clearance. Foreign service-based LLPs like general consultancies often need Unregulated Services Sector (USS) approval before they can start operating. Some activities also need a specific ministry's clearance, such as the
• Municipal premise and signboard licences. Every physical LLP office needs a
• Tax registration

These approvals are also especially important if you're planning to sponsor Employment Passes for foreign partners or staff. The Expatriate Services Division (ESD) checks for three key criteria for 100% foreign-owned LLPs:

• An active local council premise permit
• Completed tax registration
• A minimum partner capital contribution of RM500,000 (~USD 120,000) for general services, or RM 1 million (~USD 250,000) for WRT services. 

LLP Compliance Requirements After Registration

Key reporting deadlines 

After registration, you must keep your LLP information current and submit filings to SSM and the Inland Revenue Board of Malaysia (LHDN). These differ depending on whether you establish a new Malaysian LLP or register an existing overseas LLP as a foreign LLP in Malaysia.

Note: e-BOS LLP is SSM’s Electronic Beneficial Ownership System for LLPs. You use it to report any changes to your ownership structure.

LLP tax rates and filing requirements

Under the Income Tax Act 1967, an LLP is taxed as a separate entity in Malaysia. In other words, the LLP pays tax on its own profits rather than passing its taxable income directly to its partners.

For a 100% foreign-owned LLP, the standard corporate income tax rate is 24%. However, your LLP can qualify for Malaysia’s preferential tax rates if it meets the MSMC criteria under the Income Tax Act 1967.

• Have capital contributions of RM2.5 million or less at the beginning of the relevant basis period.
• Have annual gross business income of no more than RM50 million.
• Have no more than 20% of its capital contribution contributed, directly or indirectly, by foreign companies or non-Malaysian citizens.

Most foreign-owned LLPs will therefore pay the standard 24%, as eligibility falls away once foreign companies or non-Malaysian citizens contribute more than 20% of the LLP’s capital. You’ll have to file the annual Form PT tax return and, where required, make advance tax payments through CP204 instalments.

What LLP tax treatment means for foreign partners

If you are familiar with pass-through LLP treatment in the US, UK, or Singapore, Malaysia takes a different approach. The LLP settles its own Malaysian tax liabilities first. Because of this, foreign partners don’t report raw LLP revenue on personal tax returns, which simplifies your local filings and compliance.

• Tax-exempt distributions: Under Paragraph 12C of Schedule 6, profit distributions to corporate partners are fully exempt from Malaysian tax and are not subject to withholding tax. From YA 2026, however, individual partners who receive more than RM100,000 in annual distributions pay a 2% tax on the amount received. This is declared and paid through self-assessment rather than withheld at source.
• Tax-deferred reinvestment: Because the LLP itself pays tax, you can retain earnings in the business to fund expansion rather than distributing them immediately to partners. Section 75B places responsibility for the LLP’s tax liabilities on the entity itself.
• Deductible fees: Partner salaries may be deductible expenses under Sections 33(1) and 39(1)(n), provided the payments are properly set out in the LLP agreement. This lets you distinguish between a partner’s agreed remuneration and their share of LLP profits.

Set Up a Limited Liability Partnership in Malaysia with Emerhub

If you are expanding into Malaysia, Emerhub handles the local compliance and registration process for you. We can act as your resident compliance officer, draft your internal partnership agreement, and lodge your incorporation through SSM's MyLLP portal. 

Once registered, we can also set up your tax file with LHDN for your filings, record your beneficial ownership on e-BOS, and secure your local municipal premise permits. If you plan to sponsor foreign partners or staff, we also manage the Employment Pass applications.

Tell us about your partnership plans in Malaysia, and our advisors will map out your next steps. Book a free consultation via the form below.