How do you set up a Limited Liability Partnership (LLP) company in Malaysia. How does it compare with a sole proprietorship, general partnership or a private company (Sdn Bhd)
Updated: Oct 28, 2018
Setting up your own business
Setting up a business in Malaysia is moderately simple although there is a perception of red-tape & bureaucratic delays. A reasonable assumption would be 5-10days although a focus group within the Companies Commission of Malaysia has been setup to look into making a 1day setup a reality. Below we explore the differences in setting up a company especially the newly launched Limited Liability Partnership (LLP).
Limited Liability Partnership VS Sole Proprietorship/General Partnership
- LLP taxed at company level VS partnership taxed at individual level
- LLP partners profit distribution is exempt from tax.
- However, LLP partners if given salary, perquisites, and benefits-in-kind are subject to personal income tax and must be documented in the LLP agreement.
- Protection of limited liability for its partners
- Flexibility of partnership arrangement for business management
- Requires registering a Compliance Officer (one or more partners or company secretary)
Limited Liability Partnership VS Private Company
- LLP taxation at 24% same as company
- LLP with capital below RM2.5m taxed at preferential rate of 19% for first RM500,000 chargeable income
- More affordable costs to setup & maintain
- Not required to submit audited accounts reports
- Not required to hold Annual General Meetings (AGM)
- Not required to submit financial statements to SSM
- Higher annual fees RM200 to SSM (but overall savings on audit, company secretary, etc)
Malaysian Limited Liability Partnership Setup Process
Important note: register as a Verified User if you are the one submitting the LLP registration
2. Visit the nearest SSM office within 14 days bringing along:
- Email print out
- Original company secretary license/registered professional body membership certificate (if applicable)
3. (Optional): Login to MyLLP and reserve your LLP name
Note: Reservation is optional and costs RM30
4. Once registration is completed, go to LLP Registration, proceed to complete all required information and make payment of RM500.
Note: May take up to 3 business days for registration
- Proposed name
- Address of registered office and contact details
- Principal activities & MSIC code
- LLP Agreement details (if any)
- Particulars of Compliance Officer
- Particulars of Partners (minimum 2)
- Authorization letter from Professional Body/Other Authorities/Related LLP (if applicable)
Compliance officer requirements
- One of his partners or a person qualified to act as secretary under the Companies Act 1965;
- At least 18 years old and Malaysian citizen/permanent resident; and
- Usually living in Malaysia.
- Credit Card (Visa or Master)
5. Purchase a Certificate of Registration
This can be done at the SSM office or online via MyLLP. The certificate is softcopy only (!) and only available for download for a limited amount of time.
How to purchase Certificate of Registration
- Click on Buy Now!
- Search for your LLP Name or Number
- Select Certificates: Certificate of Registration RM20.00 (RM21.20 with GST)
Q: What is the LLP Annual Declaration?
(i) An LLP shall ensure to lodge with the Registrar on an annual basis within ninety days from the end of the financial year of the LLP, a declaration made by any two of its partners that the LLP is able or not able to pay its debts as they become due in the normal course of business and the declaration shall be accompanied by such other particulars as may be required by the Registrar.
(ii) In the case of the first annual declaration, it shall be lodged not later than eighteen months from the date of the registration of the LLP
Q: What types of organisations are likely to use a LLP?
- Small businesses (Start Ups)
- Professionals Groups (e.g. Lawyers, Accountants or Company Secretaries)
- Joint ventures
- Venture capitals
- Note: LLP is not allowed for non-profits
Q: Is there a need for a partnership agreement?
Yes. However, in the absence of agreement the Second Schedule of the LLP Act 2012 shall apply (Default provisions for Limited Liability Partnerships)
Q: Can an existing company convert into a LLP?
Yes. For a sole proprietorship, there must be at least 1 other partner.
Q: Can a LLP convert into a private company?
No. The LLP will need to be voluntarily dissolved first.
Q: Are there any other additional fees for LLP?
LLP Certification: RM20
Optional: Reservation of name (RM30)
Q: How do I start with the LLP application process?
Q: What documents are required for LLP registration?
- Company secretary license (if any)
- Professional body license (if any)
Q: How do I open a LLP company bank account as the SSM LLP certificate is only in softcopy?
Most major banks have made provisions for LLP companies to open a company bank account by printing out the LLP company registration certificate. You will need to also provide other required documentation (i.e. partners NRIC, partnership agreement (if any), copy of the license or practicing certificates of the professional firms).
Q: Do I need to renew my LLP license annually?
A LLP does not require an annual license renewal. However, you will need to file an annual declaration every year (or within 18 months for the 1st year) with a fee payable of RM200.
Q: What is the role of a compliance officer and who can be a compliance officer?
A compliance officer must be a partner and a Malaysian (re: above). The role of a compliance officer includes but is not limited to:-
- Lodging or submitting of documents on behalf of the partners or the LLP.
- Registering changes in registered particulars of the LLP with the Registrar as and when it occurs.
- Keeping of registers and statutory documents at the registered office of the LLP.
- Keeping of complete accounting records of business of the LLP.
- Complete and submission of income tax return form (ITRF) and ensure payment of tax by the LLP.
- Provide estimates of tax payable and make instalment payments to Malaysia Inland Revenue Board.
- Compliance officer shall be personally liable to all penalties including administrative penalties imposed on LLP for non-compliance of the LLP Act unless proved otherwise.
More Info: http://www.ssm.com.my/en/LLP-AboutLLP