Advantages of LLP in Malaysia: Why You Should Open an LLP?
Before talking about the advantages of LLP, we introduce the types of business vehicles in Malaysia.
There are 6 kinds of businesses in Malaysia to choose from. These are Sole Proprietorship, Partnership, Limited Liability Partnership (LLP), Private Limited Company, Labuan International Company, and Representative. Each of them has its own definition and characteristics.
The LLP, however, primarily focuses on the business partnership where there is a limited liability among business partners. Your investment in the company is the only thing that is subject to the law. Furthermore, the only time this will be waived is when either one or both of the business partners have really intended the crime.
The LLP was implemented in Malaysia in December of 2012 after the lawmakers passed The Limited Liability Partnership Act 2012.
Advantages of LLP in Malaysia
The LLP has several advantages. Especially, when you want to protect your personal property and only risk what you have invested in your business. The advantages of LLP are as following:
Business Partners in LLP Have Limited Legal Liability
The personal properties of business partners in LLP are not affected in case the company gets into a court. This is contradictory to the General Partnership, where your personal belongings can be involved if someone is suing the company.
Roles of Business Partners in LLP are Flexible
When you enter into an LLP business, you make a contract with your business partner and write in a piece of paper, for notarization later on. The contract states what the two of you have agreed upon, and part of it is identifying the roles of each business partner. Fortunately for this type of business, people can choose which role to play and how much time they want to spend on it.
So let’s say you’re a medical doctor, whose schedule needs flexibility in time. You can choose to serve your LLP business for 10 hours a week for your managerial functions. If the company needs to be attended more time because of the many works, maybe your business partner can do the rest. Or maybe, you can hire business managers who can play your roles while you’re not on the premises of the company.
Ease of Formation
What you only need is to give a name to your LLP business and have it registered at the Companies Commission of Malaysia. Of course, you need to comply with all the document requirements but this can be done by the Compliance Officer of the company.
Required by law, the LLP business has to appoint a Compliance Officer who will be responsible for complying with the rules and standards of doing business in the country. This could be one of the business partners or the company’s secretary.
When you go to the Registration of the Companies Commission, you will need the following information:
- Name of the proposed LLP.
- General nature of the proposed business of the LLP.
- Proposed registered office of the LLP.
- Name and details of every person who is to be a partner of the LLP.
- Name and details of the compliance officer(s) of the LLP.
- 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.
- Such other relevant information as may be specified by the Registrar.
If the technicalities to apply for an LLP business seem difficult to you, we at the 3E Accounting Services would like to make it easy. We offer the best LLP Services in Malaysia.