Limited Liability Partnerships in Malaysia

9 min read|Last Updated: April 29, 2024|

In Malaysia, there are many types of business entities for an entrepreneur to run his business. Each business entity has their own pros and cons, and it is crucial for entrepreneurs to understand them before incorporating a company.

One of such business entities is a Limited Liability Partnership. This business entity is regulated under the Limited Liability Partnership Act 2012 which combines the characteristics of a Private Limited Company (Sdn. Bhd.) and the conventional Partnership.

Definition of a Limited Liability Partnership (LLP)

A Limited Liability Partnership is a hybrid version of the conventional partnership and a Private Limited Company (Sdn. Bhd.). Some of the unique features of a Limited Liability Partnership includes:

  • Limited liability protection to partners
  • Lower income tax rate
  • Exempted from lodging audited financial statement

Before the introduction of the Limited Liability Partnership, local entrepreneurs commonly registered either as sole proprietorships or conventional partnerships. Local entrepreneurs commonly prefer these two options:

  • The registration is fast and cheap
  • No charges with corporate tax payments
  • Less formal business requirements
  • Lowest and cheapest annual maintenance
  • It can easily wind up once the business no longer brings value as expected

Nevertheless, with time, entrepreneurs increasingly confront their beliefs and uncover further drawbacks when engaging with these business entities. Owners not only incur liability for accumulated debts but also face potential lawsuits from creditors in case of bankruptcy declarations.

Malaysia Incorporation Specialist Dylan

Why register a Limited Liability Partnership (LLP) Instead?

Over the years, the Companies Commission of Malaysia abbreviated SSM (Suruhanjaya Syarikat Malaysia) has discussed thoroughly how are they able to assist local entrepreneurs with their small and medium businesses without too much impact towards their wealth.

In 2012, the Limited Liability Partnerships Act 2012 was enacted, introducing the Limited Liability Partnership (LLP) entity designed to help business owners generate profit and indirectly stimulate the local economy. The aim was for professionals such as lawyers, accountants and company secretaries to use this vehicle to carry out their professional practice. The concept will also support start-ups, and small and medium enterprises (SMEs) to grow their businesses without worrying too much about their liabilities, personal wealth as well and strict annual compliance requirements.

Advantages of Limited Liability Partnership (LLP)

Having understood the fundamentals of a Limited Liability Partnership, let’s take a look at the advantages such a business entity brings to business owners.

  1. Separate Legal Entity

    This business entity is considered a “legal entity” or “juristic person” established under the Limited Liability Partnership Act 2012. It can have its own assets, open its own corporate bank account, hire employees, obtain business licenses and operate as an independent corporate entity.

    Personal wealth will be safeguarded and not personally liable towards the debts accumulated by the business throughout the years.

  2. Owning Property

    As a “legal entity” or “juristic person”, a Limited Liability Partnership can purchase various types of assets such as building, land, vehicles, and many more under its name. Partners involved have no rights to claim upon an asset owned by the Company as long as it is a going concern basis.

  3. Ease of Ownership Transfer

    The partners involved have the right to appoint or remove partners as they deem fit. Any changes such as new profit sharing or partner remuneration packages can determine during the partner’s monthly meeting or written in a new partnership agreement.

  4. Uninterrupted Existence

    Similar to a Private Limited Company (Sdn. Bhd.), the Limited Liability Partnership also has a perpetual succession. This means it will only cease to exist once it is legally dissolved.

    The business will be uninterrupted if any existing partners depart.

  5. Easy Compliance

    Once a Limited Liability Partnership is incorporated, it is not mandatory to appoint a certified Company Secretary like a Private Limited Company (Sdn. Bhd.). However, appointing a compliance officer who is normally one of the business partners himself will be required.

    Another compliance that a Limited Liability Partnership must adhere to is filing its annual declaration of accounts without the need to appoint an auditor or lodge an audited financial statement.

  6. Lower Income Tax Rate

    The highest income tax rate chargeable towards a Limited Liability Partnership is only at a 24% flat rate compared to a conventional partnership which is higher at 28%.

    Compared to Private Limited Company (Sdn. Bhd.), a Limited Liability Partnership with a capital contribution of MYR 2.5 million or less will enjoy a preferential tax rate of 20% on the first MYR 500,000 of its chargeable income.

    However, profits paid, credited or distributed to partners within the business are exempted from corporate tax. There is no withholding tax on profits paid, credited or distributed to partners

Disadvantages of Limited Liability Partnership (LLP)

Before deciding to incorporate a Limited Liability Partnership, consider both its advantages and drawbacks as an entrepreneur.

  • A limited Liability Partnership will find it harder to access funding. Even though the Company can open a corporate bank account under its name, however, due to most bankers are still sceptical towards such business types, there are narrow loan packages that can offer.
  • Third-party investors are likely not interested in investing or funding such businesses.
  • Setting a Limited Liability Partnership may be easy initially, however, as the business grows, more partners may be involved with decision-making. This will lead to possible problems when coming to a decision, especially if there is any problem amongst the partners.
  • As Limited Liability Partnership businesses do not rely on share options, there is no way for the business to sell its share to the public as an alternative to raise funds.

Requirements to Setup a Limited Liability Partnership (LLP) in Malaysia

After considering the advantages and disadvantages and believing that a Limited Liability Partnership is the best entity for your company, registration must go online on the MYLLP website for the registration Compliance Officer of the entity on behalf of the partners.

The items needed to setup are:

  • Proposed name of the business
  • Nature of business
  • Registered office address
  • Details of all partners involved
  • Details of the appointed compliance officer
  • Letter of approval from a professional body such as MIA (if any)

Crucial information for SSM to assess business legality includes details on the entity’s operations.

Owners must furnish a list of partners involved in ownership and operations, along with the appointed compliance officer.

For those wondering about the eligibility for the compliance officer role, refer to the following criteria:

  • One of the partners within the Company or a person qualified to act as a Secretary under the Company Act 2016
  • At least 18 years old and is a Malaysian citizen or Permanent Resident (PR)
  • Lives in Malaysia

Should your Limited Liability Partnership intend to provide professional services such as law practice or auditing, the owners must provide evidence of approval from the governing authorities. This may be in the form of a letter of approval, a license, or a certification that allows members in the Limited Liability Partnership to provide professional services.

The cost to set up a Limited Liability Partnership is only MYR 500 and the incorporation is instant upon submission of the application through the MYLLP website. Once the incorporation is ready, SSM will issue the notice of registration as proof of the Company’s existence.

Limited Liability Partnership (LLP) Registration Procedure and Timeline

The registration of LLP usually takes up to 8 business days, depending on the system availability of the MyLLP Portal and The Companies Commission of Malaysia (SSM) office.

Step 1: Secure your LLP name. Should the desired name be available, a Name Reservation Form must be submitted to SSM for approval.

Step 2: LLP incorporation document must be signed and submitted to SSM (1-3 business days for processing after submission).

Step 3: A certified true copy of LLP documents will be made available. These include forms required for bank account openings, business license applications, and other business activities.

Malaysia Limited Liability Partnership (LLP) Taxation

Public Ruling No. 3/2014 outlines tax treatment for Limited Liability Partnerships, as per the Inland Revenue Board of Malaysia. Initially, the income generated within the Limited Liability Partnership will face taxation at its level.  ITA, exemption orders, and income tax rules apply to Limited Liability Partnerships according to Public Ruling No. 3/2014.

Businesses that generate income with a total capital contribution of MYR 2.5 million or below in Malaysia have to pay tax at 20% for every first MYR 500,000 of its chargeable income.

However, the rate above does not apply to a Limited Liability Partnership if more than:

  • 50% of the capital contribution of a Limited Liability Partnership is directly or indirectly contributed by a Company
  • 50% of the paid-up capital in respect of ordinary shares of the Company is directly or indirectly owned by the Limited Liability Partnership
  • 50% of the capital contribution of the Limited Liability Partnership and 50% in respect of ordinary shares of the Company is directly or indirectly owned by the corporate shareholder

Limited Liability Partnerships with capital contributions less than MYR 2.5 million are eligible to deduct certain incorporation expenses under the Income Tax (Deduction for Incorporation Expenses) Rules 2003 and Income Tax (Deduction for Incorporation Expenses) (Amendment) Rules 2005.

For more in-depth information on this topic, you may visit this website:

Even though a Limited Liability Partnership is not necessary to prepare an audit financial statement, but Company is required to keep the following records for the appointing Compliance Officer to file the taxes:

  • Information on income for the year
  • Information on expenditure for the year
  • List of debtors and creditors
  • List of all assets (current and fixed)
  • Percentage of capital contribution of each partner
  • Other supporting documents to prove the business transactions occur

Whether you’re looking to incorporate a new company in Malaysia or need help filing your taxes, you can entrust us to help you do so while you attend to your business needs! Reach out to us to find out more.


Who are compliance officers?2024-04-29T10:58:56+08:00

Compliance officers are defined as people who are tasked with ensuring the legal and regulatory compliance of an LLP. In Malaysia, LLPs are not required to appoint compliance officers; however, such a move is nevertheless beneficial and highly advisable.

Is there an upper limit on the number of owners of an LLP?2024-04-29T10:58:48+08:00

Malaysian company laws state that an LLP must have at least two owners. However, there is no mention made about the maximum number of owners which an LLP may have. This means that there is no upper limit on the number of owners of an LLP. 

Is the Limited Liability Partnership Act 2012 Expected to either be ammended or Rescinded?2024-04-29T10:58:39+08:00

Ever since its introduction, there have not been any mentions of any possible amendments to the Limited Liability Partnership Act 2012. There have also not been any mentions of the possibility that it might be rescinded. Therefore, the Limited Liability Partnership Act 2012 is expected to remain in its present form. 

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  1. Profile Picture For PHP
    Khadijah October 17, 2021 at 9:12 am - Reply

    Hi there, I like to know how the procedure if one of the partner (shareholder/director) want to transfer share to another partner(shareholder/director) in PLT Company.
    Is it any specific form of transfer share required as like SDN BHD company…issue form 32.
    Please advise.


    • Profile Picture For PHP
      Paul Hype Page October 20, 2021 at 8:54 am

      Hi Khadijah,

      For share transfer, you will need to obtain approval from the Board of Directors. If approved, you are required to complete the Share Transfer Form (Form 32A) – this will need be witnessed by a neutral party. After which, completion of the transfer will be stamped at any LHDN office.

      You need to make sure the right paperwork is used. The best will be to get your company secretary to assist you with it.

      Should you require a company secretary to assist, feel free to reach out to us on WhatsApp and we’ll can share more about our services.

      Best Regards,

  2. Profile Picture For PHP
    Apple April 14, 2021 at 1:01 am - Reply

    Hi there, is it possible for a group of people (let say A, B, and C) to own two PLT with the same amount of percentage ?
    Is it consider as same entity or separate entity? Does the account need to be merge or is there any tax regulation to be followed?
    Had search so much online but there is no answer. Please help! thank you very much!

  3. Profile Picture For PHP
    Beant Singh November 9, 2020 at 10:27 pm - Reply

    Hi, are there tax deduction for PLT company something similar to what we have for personal income tax, or can things like petrol meals etc be considered as the PLT cost of business?

    • Profile Picture For PHP
      Tiwi November 13, 2020 at 3:43 pm

      for your year end tax filing, you can deduct business expenses from your taxable income, thus reducing the amount of tax you need to pay. Business expenses are expenses you have paid to run the business. Transport and entertainment expenses should be part of your business expense and subjected to varying tax rules.

      Please contact us via Paul Hype Page to discuss further.

  4. Profile Picture For PHP
    Alice Chiew April 8, 2020 at 9:37 pm - Reply

    Hi, I have an inquiry for PLT company. If my partner want to sell out all his share to me, can I ask my spouse to be my PLT partner? Currently only 2 partners in this company.

    • Profile Picture For PHP
      Tiwiyah Kumaran April 23, 2020 at 9:24 am

      Hello Alice,

      There is no restriction imposed on the identity of any partner of a PLT company in Malaysia. Thus, your spouse is permitted to be your PLT partner.

      For further information on PLT companies, please contact us.

      Thank you for your question.

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