Limited Liability Partnership in Malaysia: How to Apply and What to Expect
- Chow Ping
- 5 days ago
- 8 min read
Updated: 1 day ago
So you're thinking of starting a business in Malaysia. Nice!
But the thought of risking your personal assets is keeping you up at night.
Or maybe you're already running a business with partners and worried that if something goes wrong, you could lose your house and savings.
We present you with the solution…
Drumroll
Limited Liability Partnership (LLP) – Malaysia's answer to giving entrepreneurs the best of both worlds.
Since its introduction in 2012, the LLP has become an increasingly popular business structure, especially among professionals and SMEs. But what exactly is it, and more importantly, is it right for you?
Let's break down everything you need to know about LLPs in Malaysia – from the basics to the application process, and all the nitty-gritty details in between.
What is a Limited Liability Partnership (LLP)?
A Limited Liability Partnership (or PLT - Perkongsian Liabiliti Terhad in Malay) is essentially a hybrid business structure regulated under the Limited Liability Partnerships Act 2012.
Think of it as the lovechild of a private company (Sdn Bhd) and a conventional partnership – inheriting the best traits from both parents.
You get the limited liability protection of a company (meaning your personal assets are safe from business debts) combined with the operational flexibility of a partnership (less red tape, fewer compliance requirements).
The LLP exists as its own legal entity, separate from its partners. This means it can own property, enter contracts, and yes, even sue or be sued in its own name.
Who should consider a Limited Liability Partnership in Malaysia?
LLPs aren't a one-size-fits-all solution, but they work particularly well for certain types of businesses.
Professional services like law firms, accounting practices, and company secretaries often choose LLPs because their governing bodies recognize this structure.
Small and medium enterprises looking to grow without the heavy compliance burden of a Sdn Bhd find LLPs particularly attractive.
Joint ventures between two companies also benefit from the LLP structure, as it provides a formal framework while maintaining operational flexibility.
Venture capital firms appreciate how the partnership model aligns with their typical operations, and start-ups love the breathing room LLPs provide while still protecting personal assets.
Key Features and Benefits of LLP
Limited Liability Protection
This is the game-changer.
Unlike a conventional partnership, where partners are personally on the hook for all business debts, an LLP shields your personal assets.
Your house, car, and savings account remain untouchable by business creditors. Only the LLP's assets can be used to settle business debts.
There's one exception though: you're still liable for your own wrongful acts or omissions. If you personally mess up, you can't hide behind the LLP structure.
Separate Legal Entity
Your LLP becomes its own "person" legally speaking. It can own property, sign contracts, and maintain bank accounts in its own name.
Even better, it has perpetual succession – meaning the LLP continues to exist even if partners come and go. No more worrying about the business dying with a partner.
Flexibility in Management
Here's where LLP really outshines a Sdn Bhd. There's no board of directors to answer to. Partners manage the business directly according to their partnership agreement.
Want to make decisions by consensus? Go for it.
Prefer one managing partner calling the shots? That works too.
The choice is yours.
Lighter Compliance Requirements
Forget about mandatory audits, unless you choose to have them.
No need for Annual General Meetings. No annual returns to file with SSM. Just submit an annual declaration stating whether your LLP can pay its debts. That's it.
The time and money you save on compliance can go straight back into growing your business.
LLP vs Other Business Structures
Let's see how LLP measures up against the competition.
When compared to a sole proprietorship, LLP wins on liability protection and professional credibility, though sole props are cheaper to set up.
The key difference? If things go south, a sole proprietor loses everything. An LLP partner walks away with personal assets intact.
Against conventional partnerships, it's no contest. Both offer similar flexibility and light
compliance, but only LLPs protect partners from each other's mistakes.
In a regular partnership, one partner's bad decision can cost everyone their life savings.
The Sdn Bhd comparison is more nuanced. Both offer limited liability, but Sdn Bhds face stricter compliance requirements – mandatory audits, annual returns, AGMs, the works.
However, if you plan to raise serious investor funding or go public eventually, Sdn Bhd remains the better choice. Tax implications also differ, so consult your accountant before deciding.
Requirements for Registering an LLP
Before diving into registration, ensure you meet these basic requirements:
At least two partners to start.
These can be individuals, companies, or a mix of both. There's no upper limit on partner numbers, so grow as big as you like.
The business must be lawful and intended to make profit.
Sorry, charities and non-profits – this structure isn't for you.
Needs at least one compliance officer who's either a partner or a qualified company secretary.
This person must be 18 or older, a Malaysian citizen or permanent resident, and actually live in Malaysia (not just maintain an address here).
Professional practices need one extra step: approval from their governing body.
Lawyers need Bar Council approval, accountants need MIA's blessing, and so on.
Step-by-Step Registration Process
Ready to register? Here's your roadmap:
Step 1: Name Search and Reservation
First, hop onto the MyLLP portal and search for your desired business name. SSM has strict naming guidelines – no offensive words, no misleading terms, no copying existing businesses.
Once you find an available name, reserve it for RM50. This reservation lasts 30 days, so don't dawdle.
Pro tip: Have backup names ready. Your first choice might already be taken or rejected for technical reasons.
Step 2: Prepare Required Information
Proposed LLP name (from your reservation)
Detailed description of business activities
Complete registered office address in Malaysia
Full details of all partners (names as per IC/passport, addresses, capital contribution)
Compliance officer information and qualifications
Professional body approval letter (if applicable)
Step 3: Submit Application via MyLLP Portal
Log back into MyLLP and fill in the online application form.
Upload all required documents. Triple-check everything – typos and errors will delay approval.
The system is quite user-friendly, but take your time.
Think this is too confusing? We'll do it for you. Just WhatsApp us here...
Step 4: Pay Registration Fee
The flat fee is RM500, payable online through the portal. Keep your payment receipt – you'll need it for your records.
Step 5: Receive Notice of Registration
If everything checks out, you'll receive immediate approval and an electronic Notice of Registration. Want a physical Certificate of Registration? You can request one for an additional fee, though most businesses find the electronic notice sufficient.
And congratulations, you’re officially a Limited Liability Partnership!
Post-Registration Compliance
Alas, registration is just the beginning. Here's what you need to keep doing:
Annual Declaration
Every year, within 90 days of your financial year-end, you must submit a declaration stating whether your LLP can pay its debts as they fall due. Two partners must sign this declaration. Miss the deadline and you'll face penalties.
For your first declaration, you get a bit more time – up to 18 months from registration date. Use this grace period wisely to set up proper accounting systems.
Maintaining Accounting Records
While you don't need audited accounts, you must keep proper books that accurately reflect your LLP's financial position. These records must be retained for seven years from the end of the relevant financial year.
Store them at your registered office, or if you keep them elsewhere, notify SSM of the storage location. There's no prescribed accounting standard to follow, giving you flexibility in how you maintain your books.
Updating Changes
The 14-day rule is sacred. Within 14 days of any change, you must notify SSM about:
Partners joining or leaving
Change of registered office address
New compliance officer appointment
Changes to business activities
Missing this deadline means penalties and potential complications down the road.
Display Requirements
Your LLP name and registration number must appear at your registered office, every branch or place of business, and on all official documents, invoices, and business correspondence. No exceptions.
Converting to LLP
Already running a business? You might be able to convert to LLP.
From Conventional Partnership
If your partnership is registered under the Registration of Businesses Act 1956, conversion is straightforward.
You'll need to show that the partnership can pay its debts and get all partners to agree to the conversion. The old partnership dissolves upon successful conversion.
From Private Company (Sdn Bhd)
This is more complex. Your Sdn Bhd must be in good standing – all debts payable, all statutory fees settled.
You'll need to advertise your intention in a newspaper and the Government Gazette, then get every single creditor to agree to the conversion. One holdout creditor can derail the entire process.
Remember: conversion is a one-way street. Once converted, the original entity ceases to exist. There's no "undo" button.
Frequently Asked Questions
Can foreigners form LLP in Malaysia?
Foreigners can absolutely be partners in a Malaysian LLP. However, at least one compliance officer must be a Malaysian citizen or permanent resident who ordinarily resides in Malaysia.
What happens if one partner leaves?
The LLP continues operating normally. Just update SSM within 14 days of the partner's departure. If you're down to one partner, you have six months to find another (extensions possible up to one year).
Can LLP be converted back to Sdn Bhd?
Not directly. You'll need to wind up the LLP first, then incorporate a fresh Sdn Bhd. It's a completely new registration, not a conversion.
What about taxes?
LLP itself doesn't pay tax – it's tax transparent. Profits flow through to partners who pay tax at their individual or corporate rates.
This can be advantageous or disadvantageous depending on circumstances. Definitely consult a tax advisor.
Can banks give loans to LLP?
Yes, banks can and do lend to LLPs. However, expect more scrutiny than established Sdn Bhds face.
Build strong financial records, maintain good banking relationships, and be prepared to provide personal guarantees initially.
Cost Considerations
Let's talk ringgit and sen.
Initial setup costs include the RM500 registration fee and RM50 for name search.
Now here's where many entrepreneurs try to save money by doing it themselves.
Sure, you could spend weeks figuring out the forms, searching online forums for answers, and risk rejection because of simple mistakes.
Or you could engage professionals who've done this hundreds of times and know exactly what SSM wants.
Professional setup fees typically range from RM1,500 to RM3,000, depending on complexity. Think of it as saving yourself time, money, and several new grey hairs.
Ongoing costs are refreshingly light compared to Sdn Bhd. Annual declaration runs just RM200.
Keep in mind, managing compliance isn't just about the fees.
Many LLPs outsource their compliance officer duties for RM2,000 to RM5,000 yearly because penalties for non-compliance start at RM200 per offense and add up quickly.
Miss your annual declaration? Penalty. Forgot to update partner changes? Another penalty.
Hidden costs can bite hard, too. Partner disputes without proper agreements can lead to expensive legal battles.
Poor record-keeping might trigger tax audits. And if you need to convert to Sdn Bhd later because you chose the wrong structure? That's starting from scratch.
At Douglas Loh & Associates, we've seen business owners waste thousands on avoidable mistakes.
That's why we handle not just your LLP registration, but ensure you're set up correctly from day one – proper partnership agreements, compliance systems, and ongoing support to keep you penalty-free and sleeping soundly.
Want to focus on your business while we manage the boring legal business paperwork for you? We’ve got you.
Click here to claim your free consultancy call. Let's chat!
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