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Conversion into a Limited Liability Partnership in Malaysia | Convert Sendirian Berhad to LLP

Existing conventional partnership or private company (Sdn Bhd) may convert into Limited Liability Partnership (convert Sendirian Berhad to LLP) to enjoy the following key benefits:-

  • protection of limited liability to its partners similar to the limited liability enjoyed by shareholders of a company
  • Less strict statutory compliance requirements & lower compliance costs – Not necessary to have audited accounts & qualified Company Secretary
  • Perpetual legal existence (Continue Legal Entity)

For more information on differences between LLP and various other business vehicles in Malaysia, you may refer to Sole Proprietor vs LLP vs General Partnership vs Company

The conversion process of existing conventional partnership or private company (Sdn Bhd) into a limited liability partnership (convert Sendirian Berhad to LLP) is as follows:-

  1. You will have to set-up your new Limited Liability Partnership (LLP).
  2. All assets as well as liabilities of partnership/company has to be transferred to the newly set-up LLP.
  3. The partnership/company has to be closed down properly via appropriate submission with Suruhanjaya Syarikat Malaysia.
  4. The LLP is ready for operation.

Criteria for Conversion into a LLP

(a) From Conventional Partnership to LLP

  • Partners remain the same after conversion
  • Partners remain the same after conversion
  • The conventional partnership is solvent
  • For professional practice, an approval letter is required from the governing body

(b) Private limited company (Sdn Bhd) to LLP

  • Shareholders remain the same after conversion
  • There is no subsisting security interests in its assets
  • The private company is solvent
  • All outstanding statutory fees to government agencies has been settled
  • The private company has placed an advertisement in at least one widely circulated newspaper in Malaysia and published a notification in the Gazette of its intention to convert to a limited liability partnership
  • All creditors agree to the conversion.

Effects of Conversion into a LLP

Converting into a limited liability partnership, means a transfer of the properties, interests, rights, privileges, liabilities, obligations and the undertaking of the conventional partnership/private company to the limited liability partnership.

After conversion, the conventional partnership or private company shall be deemed to be dissolved.

  1. Assets – all assets previously held by the conventional partnership/ Sdn Bhd will be transferred to the LLP *
  2. Pending Proceedings – All pending proceedings may be continued, completed and enforced against or by the LLP
  3. Existing Agreements/Contracts -Existing agreements, contracts, etc. including employment contract shall have effect as though the LLP were a party
  4. Liabilities & Obligations – the partners of the conventional partnership or Sdn Bhd shall continue to be personally liable (jointly and severally with the LLP) for liabilities and obligations incurred prior to the conversion
  5. Permit or Licence – Converted LLP may need to reapply for any approval, permit or licence issued under any written law to the conventional partnership or private company which is in force immediately before the date of registration of the limited liability partnership.

Acquiring Land by LLP and Related Matters

(a) Legal Provisions Relating to Acquiring and Disposing of Land under LLP Act 2012

Upon conversion, all properties vested under conventional partnership or private company shall be transferred to and vested in the LLP. Prior to that, LLP must ensure that the land is not subject to any charge. If any property is registered with relevant authority, the LLP must notify the relevant authority (Land Administrator / Registrar of Titles) upon conversion.

(b) Requirement under the National Land Code (Act 56/1965)

The ability to hold land is governed by National Land Code (NLC) The NLC indicated that LLP Agreement shall contains an express clause to effect that the LLP is empowered to hold land.

For transfer of title of the land from conventional partnership to LLP
– Shall be done using Form 14A of the First Schedule of the NLC

For transfer of title of the land from private company to LLP
– Requires a Vesting Order obtained from the High Court to effect such transfer

(c) Registration of Dealings with Land Administrator / Registrar of Titles

LLP has to strictly observe the procedures to avoid complication in dealing with Land Administrator / Registrar of Titles with regards to registration of land or notification of conversion affecting any record of an existing land ownership.

Please note Foreign LLP or LLP with foreign partners are NOT allowed to own any land or interest in land.

In respect of land which is subject to restriction that requires approval of authority, prior approval from the authority is required before transfer, lease or charge can be registered.

For LLP which name has been registered in a title and subsequently changed name, the LLP is required to inform the Land Administrator / Registrar of Titles accordingly so that necessary changes can be made in the title.

(d) Participation in Public Auction

LLP may participate in public auction made at the request of chargee involving Land Office title or Land Registry title. Any discrepancies between information as contained in LLP agreement and corporate information of LLP, or pertaining to the person designated to act on behalf of LLP for the auction may lead to LLP being barred from participating in the public auction.