What Is A Limited Liability Partnership?

What is an LLP

An LLP, short term for “limited liability partnership”, is a partnership that combines the features you will find in a partnership and a limited liability company. In this regards, an LLP:

1. Is mostly governed by the Limited Liability Partnership Act;
2. Accords protection to its partners similar to the protection accorded to the shareholders of a limited liability company coupled with the flexibility of internal business regulation similar to that of a conventional partnership;
3. Debts’ and obligations’  is subject to the availability of the assets of the LLP and not that of its partners’;
4. Has the legal status of a body corporate/ company, and as with any other company, 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; and
5. Is flexible in terms of its formation, maintenance and termination while simultaneously has the necessary dynamics and appeal to be able to compete domestically and internationally.

How does one create an LLP?

1. Create an account i.e. proposed name and password with SSM;
2. Register the names of the proposed partners with SSM;
3. Log on to https://www.myllp.com.my/ to create the LLP after registering the partner’s name;
4. Register the LLP (via the website above) by submitting an application to the registrar coupled with the following information:
   1. Name of the proposed LLP;
   2. General nature of the proposed business of the LLP;
   3. Proposed registered office of the LLP;
   4. Name and details of every person who is to be a partner of the LLP;
   5. Name and details of the compliance officer(s) of the LLP;
   6. 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 Act; and
   7. Such other relevant information as may be specified by the registrar.

How does closes an LLP?

A. Receivership and winding-up by the court

The receivership and winding-up by the court for an LLP is similar to that of a receivership and winding-up of a company limited by shares (under the Companies Act and Companies Winding Up Rules), subject to modifications and adaptations as may be necessary for an LLP.

B. Striking-off

This can only be done if the registrar has reason to believe that:

1. The LLP is not carrying on business/ not in operation;
2. Contravened the Act;
3. Prejudicial to the national interest;
4. No acting liquidator for a court-ordered winding up; or
5. The LLP is fully wound-up and there are no assets/ assets available are not sufficient to pay the costs of obtaining an order of the court to dissolve the LLP. 

Usually, what happens is the registrar will send out a notice to the LLP or its partner, specifying his intention to strike-off the LLP (based on the reasons above). The registrar will then make an informed decision, based on whether there was a reply from the LLP or its partners/ the reasons given as to why the LLP should not be struck off by the registrar. 

However, it does not mean that the partner’s liability is absolved once the LLP has been struck-off. the Act noted that the liability of every partner continues and may be enforced as if the name of the limited liability partnership had not been struck-off.

C. Voluntary winding-up

The most common method is to close down the LLP is via voluntary winding up. It occurs when all the partners agree to close down the LLP provided that the LLP:

1. Has ceased to operate; and
2. Has discharged all its debts and liabilities.

These are the general steps in voluntary winding-up an LLP:

1. Obtain a written notice from the Inland Revenue Board (IRB) of Malaysia that it has no objection to the registrar making a declaration of dissolution of the LLP;
2. Send a notice to all partners via registered post notifying the intention to close down the LLP;
3. Published a notice in one widely circulated Malaysian newspaper in Bahasa and one in English to the effect that the applicant propose to apply to the registrar for a declaration of dissolution of the LLP; and
4. Execute a statutory declaration as required and submit the application (alongside all the documents above online) for a declaration of dissolution to the registrar within 7 days from the date of the publication of notice in the newspapers. 

If the registrar is satisfied with the application i.e. no one opposed the dissolution/ the reason for opposing is not reasonable, the register will then make a declaration of dissolution provided all the surplus assets have been distributed accordingly within 14 days to each of the partners of the LLP.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.

For further inquiries, please email us at general@mathews.my.