What is a Limited Liability Partnership?
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. LLP provides limited liability status to its partners and offers the flexibility of internal arrangement through an agreement between the partners.
Who is it for?
The LLP business structure is designed for all lawful business purposes with a view to make profit. LLP may also be formed by professionals such as Lawyers, Chartered Accountants and Company Secretaries for the purpose of carrying on their professional practice. The LLP concept will also support start ups, 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.
Salient features
Amongst others, LLP is featured with the protection of limited liability to its partners similar to the limited liability enjoyed by shareholders of a company 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’. An 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.
1. The LLP is a body corporate and has the legal personality separate from the partners (separate legal entity);
2. LLP is a perpetual succession;
3. Any partnership in the partnership will not affect the existence, right or liberty of the LLP;
4. LLP has unlimited capability and is capable of suing and be sued for it, acquire, owning, holding and develop or dispose of property; and
5. LLP may do and suffer such other acts and things as bodies corporate may lawfully do and suffer.
Formation of LLP
1. By minimum two (2) persons (in whole or in part, an individual or a body corporate);
2. For any lawful business for the purpose of making a profit; and
3. In accordance with the terms of the LLP agreement.
Who can register
1. Professionals
2. Small and medium business.
3. Joint Venture.
4. Venture Capital (Venture Capital)
Information required for registration LLP
1. Proposed name of the LLP
2. Nature of business
3. Address of registered office
4. Name and details of partner
5. Name and details of compliance officer
6. Letter of approval from professional body (if any)
Compliance Officer
Registration of LLP is made by the compliance officer appointed by LLP:
1. One of his partners or a person qualified to act as secretary under the Companies Act 1965;
2. At least 18 years old and Malaysian citizen/permanent resident; and
3. Usually living in Malaysia.
Conversion into LLP
Who can convert?
i) A conventional partnership registered under the Registration of Businesses Act 1956 or any partnership established by two or more persons for the purpose of professional practice
ii) Private companies incorporated under the Companies Act, 2016
Conversion from conventional partnership to LLP
Eligibility criteria:
· Same partners and no one else
· At the date of application the conventional partnership solvent
· In cases of professional practice, an approval letter from the governing body
Conversion from private company to LLP
Eligibility criteria:
· Same shareholders and no one else
· 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
· Advertisement has been placed in a widely circulated newspaper and the Gazette
· All creditors agreed to the conversion
Effect of conversion to LLP
· Vesting of assets of the conventional partnership/private company into the LLP
· 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 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 private company to LLP, the LLP continue to be liable for liabilities and obligations incurred prior to the conversion
Registration of Foreign LLP
A foreign LLP can carry on business in Malaysia but can only do so by registering with SSM and lodge the following documents:
· Certified copy of the certificate of registration in its place of incorporation, establishment or origin; and
· Certified copy of its charter or instrument defining its constitution, if any.
Registration fee
Fee for registration of LLP is RM500.00
Note:
1. Only notice of registration will be issued.
2. Certificate of registration of LLP will be issued by SSM upon request together with the prescribed fee.
Tags: Business, Limited Liability Partnership, LLP