Guide to Limited Liability Partnership (LLP Setup) Registration in Malaysia
You can use this guide to gain an understanding on LLP in Malaysia including how to register a LLP in Malaysia and the compliance requirements. Self-registration of LLP vide MyLLP Portal at www.ssm.com.my may be simple but there are many compliance requirements that you must comply with. We urge you to engage 3E Accounting, one of the top Malaysia registration company, to provide professional advices and consultancy in setting up your LLP.
LLP is an alternative business vehicle regulated under the LLP Act 2012 which combines the characteristics of a company and a conventional partnership. LLP offers advantages similar to a private limited Company (Sdn Bhd) such as Limited Liability, Perpetual Legal Existence but cheaper compliance costs due less statutory compliance – not compulsory to have audited accounts & appoint qualified Company Secretary.
Before You Register LLP in Malaysia
Keep in mind the following LLP information you’ll need to provide:
- LLP Name. You must receive approval for your new LLP name.
- Partners. You must have at least two partners but there is no limit for maximum number of partners. The partners could be Individuals (natural persons) or bodies corporate or a combination of both. There is no requirement on partners to have principal or only place of residence in Malaysia unless the partner(s) acting as the compliance officer of the LLP
- Compliance Officer.Under the LLP Act 2012 there is a requirement for LLP to appoint at least one compliance officer. The compliance officer has to be either from amongst the partners of the LLP or a person qualified to act as a secretary under the Companies Act 1965 who is at least 18 years of age and a citizen or permanent resident of Malaysia and ordinarily resides in Malaysia.
- Registered Address. You need to have a registered office in Malaysia to which all communications and notices may be addressed. It can be residential or commercial, but can’t be a post office box.
- Taxation. Tax Treatment of LLP is similar to Company
- Income from LLP will be taxed at the LLP level
- LLP resident in Malaysia, with a total capital contribution (whether in cash or in kind) of RM2.5 million and less at the beginning of the basis period for a year of assessment may enjoy lower tax rate of 20% for every first RM 500,000 of its chargeable income.
- Check the Taxation for LLP for more details.
Other Key-Considerations When You Setting Up Your Own LLP
The mutual rights and duties of the partners of an LLP and the mutual rights and duties of the LLP shall be governed by the LLP agreement. However, in the absence of agreement as to any matter set out in the Second Schedule of the LLP Act 2012, provisions of the Second Schedule relating to that matter shall apply.
Default Provisions for LLP under Second Schedule of LLP Act 2012
- All the partners are entitled to share equally in the capital and profits of the LLP
- Every partner may take part in the management of the LLP
- No partner shall be entitled to remuneration
- Any matter of issue relating to the LLP shall be decided by resolution passed by a majority in number of partners and for this purpose, each partner shall have one vote
Partners of LLP are strongly advise to draft an agreement while setting up the business of LLP to avoid future dispute between partners.
Key considerations for when drafting the partnership agreement
- Rights & duties of partners
- Share of profit
- Capital Contribution
- Management and control of the business
- Remuneration of partners
- Holding of property
Tax Planning and Professional Advices
Tax planning need to be considered before start up your business to achieve tax efficiency:-
- What it the tax treatment for LLP ?
- Should all partners entitle remuneration?
- What expenses are deductible?
- Any tax incentive LLP shall be entitled for?
- How about GST implication to my new business?
Example of tax planning case – to include partners’ remunerations in the partnership agreement, otherwise the partners’ remunerations are not tax deductible.
Required Information and Documents
The Registrar (SSM) will need the following information and documents:
- 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 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
3E Accounting will collect the following documents to help you register your LLP:
|Non-Residents (Foreigners)||Copy of passport, overseas residential address proof, and other Know-Your-Client (KYC) information such as a bank reference letter, personal and business profile, etc.|
|Malaysia Residents||Copy of Malaysia identity card|
|Corporate Entity Shareholder||Copy of registration documents such as Certificate of Incorporation and Memorandum & Articles of Association.|
We will need officially endorsed translated versions of any important documents that are not in English.
Registration Procedure and Timeline
Registration of LLP will normally take 4-7 business days (subject to system availability of MyLLP Portal & SSM office)
Step 1: Reserve Your LLP Name
The Registrar must approve your LLP name before you can register it. 3E Accounting will fill out and submit the necessary application on your behalf vide MyLLP portal. The Company Registrar should notify you of her decision instantly vide email.
Certain words will slow down the approval process, including account, law, consultancy which may indicate the LLP is formed for the purposes of carrying on any professional practice. If such circumstances, the application shall be accompanied by an approval letter from the governing body.
To expedite the process, pick a name that:
- is different from any existing local LLP names
- does not infringe with any trademarks
- is not dirty, obscene or rude
- is not already reserved
The name is reserved for a period of thirty (30) days from the approval date by the registrar.
Step 2: Register LLP
After the Registrar approves your LLP name, 3E Accounting will proceed with the LLP registration. You must pay the Registrar RM500 for the registration fees. This fee is included in the LLP Setup Packages provided by 3E Accounting.
Step 3: Application for Certificate of Registration & Business Profile
Certificate of Registration
You’ll receive an email from the Registrar notify you on the successful of registration of your LLP. The email confirms that your LLP are incorporated with the LLP Registration Number. 3E Accounting will help to you apply from the Registrar on the certificate of registration, fee payable to SSM amounting RM20 per copy. The processing time is from 3 to 5 business days usually.
The Registrar will create a business profile for your LLP after the registration process is completed. 3E Accounting will secure this for you. The registrar issued business profile e contains the following key information:
- Name of LLP and registration number
- Previous names for the company, if any
- Registration date
- Nature of business
- Registered address
- Address of place of business
- Partners details
- Compliance Officer details
Once you have the certificate of registration and business profile, you can proceed with all legal and contractual tasks you need to perform in Malaysia. You might need to open a corporate bank account, lease office space or set up your phone and Internet accounts. Ask 3E Accounting for assistance in all your setup tasks.
3E Accounting also offers the following professional services in addition to the LLP Setup:
- Opening of Bank Accounts
- Income Tax Registration
- Open of EPF and SOCSO file
- GST registration
- Annual Declaration to SSM
Continuous Obligations of LLP
With the LLP registered, you could start running your business. But don’t forget on the continuous obligations of LLP including registration of changes, keeping of accountings records, annual declaration to SSM, tax compliance and other statutory compliance matters. DON’T WORRY, 3E Accounting could always help you on these.
Registration of changes in particulars
An LLP shall ensure to lodge a notification to the Registrar if any changes made or occurs in the registered particulars of the LLP within fourteen days from the date of which the changes made or occurred.
Keeping of Registers and Statutory Record
An LLP shall keep at all times at the registered office the following:
- a notice of registration issued by the Registrar of LLP;
- a register of the name and address of each partner and compliance officer;
- a copy of the most recent annual declaration;
- a copy of any statement lodged with the Registrar under the LLP Act 2012;
- a copy of certificate (if any), issued by the Registrar under section 11(4) LLP Act 2012;
- a copy of the LLP agreement and any amendment thereto;
- a copy of any instrument relating to any charge created by the LLP; and
- any other documents that the Registrar may, from time to time, require to be kept by an LLP.
Keeping of Accounting Records
- An LLP shall keep such accounting and other records as will sufficiently explain the transactions and financial position of the LLP and enable profit and loss accounts and prepare balance sheets from time to time which give a true and fair view of the state of affairs of the LLP at the LLP registered office or such other place as the partner thinks fit provided that a notification of that place been made to the Registrar;
- An LLP shall retain the accounting records and other records as above for a period of not less than seven years from the end of financial year in which the transactions or operations to which those records relate are completed.
- 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.
- In case of the first annual declaration, it shall be lodged not later than 18 months from the registration of LLP or 90 days from the financial year end, whichever is earlier.
If the LLP fails to lodge the Annual Declaration within the time or extended time granted by the Registrar, LLP commits an offence and shall on conviction, be liable to a fine not exceeding RM20,000 and further fine not exceeding RM500 for each day the offence continues after conviction.
Extension of Annual Declaration Submission to SSM
The application for extension of time shall be made after the financial year end and at least 30 days before the due date for submission of annual declaration with a fee.
The reasons which may be considered by the Registrar for granting an extension are as follows:-
a) The death of a partner/compliance officer (to be supported with death certificate)
b) Natural disaster such as fire, flood, etc. which destroyed records or documents of the LLP (to be supported with police report).
c) Theft (to be supported with police report).
d) The LLP is under an investigation where account books or records has been ceased and under the possession of SSM or other Authorities (to be supported with relevant document/letter from the relevant Authority).
e) The LLP is involved in a court case (to be supported with relevant documents).
f) Any other reason that the Registrar may deem fit to grant EOT.
Please note that the Registrar reserves the right to reject the application if the Registrar is not satisfied with the reason(s) given for the need of an extension of time and the fee paid for the application will not be refunded.
- Tax File Registration (including sales / services tax & GST)
- Tax Filling
- Estimation of Tax Payable & Tax Payment