Guide to Registering a Malaysian Limited Liability Partnership (LLP)

This guide can help you understand the Malaysian Limited Liability Partnership (LLP), including the registration process and compliance requirements. While self-registration on the MyLLP webpage of www.ssm.com.my may be relatively straightforward, you need to comply with many regulatory requirements. We strongly recommend that you consider hiring one of Malaysia’s top registration companies, such as Retis Global Info, for professional advice and consultation on setting up your LLP. This ensures that you follow the correct steps throughout the registration process and meet all legal and industry requirements.

LLP is a type of company regulated by the Limited Liability Partnership (LLP) Act 2012. It combines the characteristics of companies and traditional partnerships. LLP offers advantages similar to private limited companies (Sdn Bhd), such as limited liability and continuous legal existence. However, due to lower compliance requirements, LLP’s compliance costs are also relatively lower. There is no requirement for mandatory preparation of audited accounts or appointment of a qualified company secretary.

Before registering a Malaysian LLP

Documents required:

• LLP name –Your LLP company name must be approved before use.
• Partners -The company must have at least 2 partners, but there is no limit on the maximum number of partners. Partners can be individuals (natural persons) or corporate bodies or a combination of both. Partners do not need to be residents of Malaysia unless they also serve as compliance officers for the LLP.
• Compliance officer-Under the LLP Act of 2012, an LLP is required to appoint at least one compliance officer. The compliance officer must be a partner of the LLP or a person qualified to act as a secretary under the Companies Act 1965, aged 18 years or above, a citizen or permanent resident of Malaysia, and residing in Malaysia.
• Registered address –You need to establish a registered office in Malaysia to handle all communications and receive notices. It can be a residential or commercial office address but cannot be a postal box.
• Taxation- Taxation for LLP is similar to that for companies.
  • The income of an LLP will be taxed at the LLP level.
  • LLPs who are tax residents of Malaysia will enjoy a lower tax rate of 20% on their first RM500,000 of taxable income if the total contribution (whether in cash or in kind) is RM2.5 million and below at the beginning of the basis period for the year of assessment.
    

Other key things to consider when setting up your own LLP include the following

Partnership Agreement
The mutual rights and obligations of the LLP Partners and the mutual rights and obligations of the LLP shall be governed by the LLP Agreement. If no partnership agreement has been made in respect of any matter specified in the Second Schedule to the LLP Act 2012, then the regulations in Schedule 2 relating to that matter shall apply.

Default provisions in the Second Schedule to the LLP Act

• All partners are entitled to an equal share of the capital and profits of the LLP
• Each partner can participate in the management of the LLP
• No partner shall be remunerated
• Any issue related to the LLP shall be resolved by a majority vote of the partners, and for this purpose, each partner shall have one vote.

It is highly recommended that LLP partners draw up an agreement at the time of setting up the LLP to avoid disputes between partners in the future.

Key Considerations in Preparing a Partnership Agreement

• Rights and obligations of cooperators
• Profit share
• Capital contribution/funding
• Business management and control
• Partner’s Remuneration
• Asset Holding

Tax planning and professional advicev
Tax planning needs to be considered prior to conducting business for effective taxation:

• What is the tax treatment of LLP?
• Should all partners be entitled to remuneration?
• What expenses are deductible?
• Is the LLP entitled to any tax incentives?
• How will GST affect my new business?

Tax Planning Example – Incorporate partner’s remuneration into partnership agreement, otherwise partner’s remuneration is not tax deductible.

Information and documentation required

The Registrar (SSM) will require the following information and documentation:

• Proposed LLP Company Name
• Nature of business proposed by the LLP
• Registered office of the proposed LLP
• Name and details of each LLP partner
• Name and details of LLP compliance officer
• As stated in column 3 of Schedule 1 to the LLP Act 2012, if the LLP is formed for the purpose of carrying on any professional practice, the applicant should be accompanied by a letter of approval from the relevant governing body.

Rising Global Consultants Sdn. Bhd will collect the following documents to help you register a Limited Liability Partnership (LLP):

Rising Global Consultants Sdn. Bhd will collect the following documents to help you register your LLP:

We need officially verified translations of any important document that is not in English.

Registration process and timetable

The registration of a Limited Liability Partnership (LLP) usually takes 4 to 7 working days to complete, depending on the operation of the website (MyLLP Portal) system and the office operation of the Companies Commission of Malaysia (SSM).

Step 1: Reserve Your LLP Company Name

The Registry must approve your LLP company name before it can be officially registered. On your behalf, Reliance Global Markets will confirm the necessary application procedures and submit the application through the MyLLP website. The Registrar of Companies will notify you of the application decision by email.

The approval process may be slower for certain organizations, including accounting, legal, and consulting firms, where the LLP is incorporated for the purpose of conducting a professional practice. If this is the case, the application should be accompanied by a letter of approval from the relevant governing body.

To speed up the process, your LLP’s company name should be:

• Different from any existing local LLP name
• Does not infringe any trademark
• Not vulgar, obscene or indecent
• Not already reserved by another company

The name will be reserved for thirty (30) days from the date of approval of your company name by the Registrar.

Step 2: Register a Limited Liability Partnership (LLP)

After the Registry approves your LLP name, 3E Accounting will proceed with the rest of the registration process for you. You are required to pay a registration fee of RM500 to the Registrar. This fee is included in the LLP Company Setup Package offered by 3E Accounting.

Step 3: Application for Certificate of Registration & Business Profile
Certificate of Registration

When the Registry approves your LLP application, you will be notified by email. The email confirms that your LLP has been successfully registered and includes your LLP registration number. Next, Reliance Global Information will assist you to apply for a Certificate of Registration from the Registrar. A fee of RM20 will be charged for each certificate issued by the Companies Commission of Malaysia (SSM). The processing time is usually 3 to 5 working days.

Company Profile

The Registry will create a company profile for your LLP once the registration process is complete. Rexin Global Information will do this for you. The company profile issued by the Registry will cover the following key information:

• LLP name and registration number
• Former name of the company (if any)
• Date of Registration
• Nature of Business
• Registered Address
• Business Address
• Particulars of Co-operators
• Compliance Officer’s Information

After obtaining the Certificate of Incorporation and Company Profile, you can proceed with the other characters including all the legal formalities and contracts required for practicing in Malaysia. You may need to open a company bank account, rent an office or set up a cell phone and internet account. You can seek help from 3E Accounting for all these setups.

To help you set up your LLP, Rising Global Consultants Sdn. Bhd also offers the following professional services:

• Opening of bank accounts
• Income Tax Registration
• Provident Fund (EPF) and Social Security (SOCSO) Account Opening
• GST registration
• Annual declaration to the Companies Commission of Malaysia (SSM)

Continuing obligations of LLP

After registering your LLP, you can start operating your company. But don’t forget the ongoing obligations of an LLP, such as notifying the authorities of any changes, keeping accounting records, filing annual declarations with the Companies Commission of Malaysia (SSM), tax compliance and other statutory compliance matters. But don’t worry, Reliance Global Information is always here to help.

Change in registration details
A limited liability partnership is required to notify the Registrar of any alteration or change in its registered particulars within fourteen days from the date of such alteration.

Retention of registration and statutory records
A limited liability partnership shall retain the following documents and information with the Registrar:

• Notice of registration issued by the LLP Registry.
• A register of the names and addresses of each partner and compliance officer.
• A copy of the latest annual statement.
• A copy of any statement filed with the Registrar under the LLP Act 2012.
• A copy of the certificate (if any) issued by the Registrar under section 11(4) of the LLP Act 2012.
• A copy of the LLP Agreement and any amendments thereto.
• A copy of any expenses incurred in setting up the LLP;
• Any other documents that the Registrar may require the LLP to keep.

Maintenance of accounting records

• The LLP shall keep accounting and other records sufficiently descriptive of the LLP’s transactions and financial condition, and shall prepare and maintain a profit and loss account and balance sheet at the LLP’s registered office or at such other place as the partners deem appropriate to permit a true and fair view of the state of affairs of the LLP, provided the LLP has notified the Registrar of such location.
• The limited liability partnership shall retain such accounting and other records for a period of not less than seven years from the end of the fiscal year in which the transaction or business to which such records relate was completed.

Annual Declaration

• The LLP shall ensure that within ninety days after the end of the LLP’s fiscal year, it shall annually file with the Registrar a statement by any two of its partners that the LLP is able or unable to pay its liabilities, and in addition such statement shall be accompanied by such other information as the Registrar may require.
• If this is the first time an annual statement is filed, it should be filed within 18 months of the LLP’s registration or within 90 days of the end of the fiscal year, whichever is earlier.

If the LLP fails to file the annual statement within the time granted or extended by the Registrar, the LLP commits an offence and is liable on conviction to a fine not exceeding RM20,000 and not exceeding RM500 for each day on which the offence is committed Continued on conviction.

Delay in filing Annual Declaration with SSM

Applications for extensions should be made no later than 30 days after the end of the financial year and before the deadline for filing the annual statement, and are subject to the payment of an extension application fee.

The reasons that the Registrar will consider granting an extension are set out below:

a) Death of partner/compliance officer (as evidenced by death certificate)
b) Destruction of LLP records or documents by natural calamities such as fire, flood, etc. (as evidenced by police report book).
c) Theft (as evidenced by police report book).
d) The LLP is under investigation and its accounts or records have been discontinued and are in the possession of SSM or some other agency (as evidenced by relevant documents/letters from the concerned agency).
e) The LLP is involved in a court case (as evidenced by relevant documents).
f) Any other reason which the Registrar deems fit to grant EOT.

Please note that if the Registry is not satisfied with the reasons for the extension, the Registry reserves the right to refuse the application and will not refund the fee paid for the application for extension.

Tax Compliance

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• Registering for taxes (including sales/service tax and excise tax)
• Filing tax returns
• Estimation of tax payable and taxes