If you and your partners are thinking to start a new business together but have no idea of which type of business entity to be formed, you may then consider to form a Limited Liability Partnership (“LLP”) for your new business.
LLP is a new form of business vehicle which is governed by the Limited Liability Partnership Act 2012. It combines the characteristics of a private limited company and a general partnership that provides the protection of limited liability for its partners and flexibility of the partnership arrangement for the internal management of its business.
Differences between an LLP and a General Partnership
The LLP offers limited liability to its partners whereby any debts and obligations of the LLP will be borne by the assets of the LLP. In the case of a conventional partnership, the partners are jointly and severally liable with the firm.
Difference between an LLP and a Private Limited Company
There are many fundamental differences between an LLP and a private limited company. The main differences, amongst others, are as follows:
- i. No issuance of shares;
- ii. Flexibility in making decisions;
- iii. No requirement to submit financial statements to Companies Commission of Malaysia; and
- iv. Accounts need not be audited.
Basic Requirements for registration of a LLP
- i. At least two (2) partners, consisting of wholly or partly, individuals or bodies corporate.
- ii. It shall appoint at least one (1) compliance officer among its partners or person qualified to act as secretary under Companies Act 2016, who is also a citizen or permanent resident in Malaysia and ordinarily resides in Malaysia.
- iii. It shall have a registered office in Malaysia to which all communications and notices may be addressed.
Application to register a LLP
The following information are required to be furnished to the Registrar in order to register a LLP by the compliance office who shall register with the Registrar so as to enable him/her to submit documents on behalf of the partners of the LLP:
- i. Name of the proposed LLP;
- ii. General nature of the proposed business of the LLP;
- iii. Proposed registered office of the LLP;
- iv. Name and details of every person who is to be a partner of the LLP i.e. identity card number, residential address, email address and mobile phone number;
- v. Name and details of compliance officer of the LLP; and
- vi. If the LLP is formed for the purposes of carrying on any professional practice, the application shall be accompanied by an approval letter from the governing body as specified in the third column of the First Schedule of the LLP Act 2012.
Once the Registrar is satisfied that all information provided is complete and complied with the required procedures, a Notice of Registration will be issued which is the conclusive evidence of the registration of LLP.
The Certificate of Registration will only be issued by the Registrar upon application together with the prescribed fee.
Further official information: https://www.ssm.com.my/Pages/Register_Business_Company_LLP/LLP/Starting-a-Limited-Liability-Partnership-(LLP).aspx
Further consultancies: https://roundtableconsultancy.com/