What You Need to Know About Setting Up a LLP in Malaysia: A Guide for Entrepreneurs

Setting up a Limited Liability Partnership (LLP) can be an important decision for entrepreneurs who wish to combine the flexibility of a traditional partnership with the protection of limited liability. This business structure is particularly suitable for professional firms, family businesses, joint ventures and businesses operated by two or more partners.

In this guide, you will learn the key requirements for establishing an LLP in Malaysia, including its benefits, registration process, compliance obligations, tax treatment and important considerations before deciding whether an LLP is the right structure for your business.

Understanding Limited Liability Partnership (LLP)

In Malaysia, a Limited Liability Partnership, commonly known as an LLP or Perkongsian Liabiliti Terhad (PLT), offers an alternative to operating as a conventional partnership or incorporating a private limited company.

An LLP combines the operational flexibility of a partnership with certain legal protections commonly associated with a company. This makes it a potentially suitable structure for professional practices, family businesses, joint ventures, start-ups and businesses operated by two or more partners.

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Who Is Suitable for an LLP

Professional Practices Chartered accountants Lawyers Company secretaries Consultants Other approved professional practitioners

Consultancy and Advisory Services Business consultancy Management consultancy Financial advisory Human resources consultancy Information technology consultancy Marketing consultancy Sustainability and ESG consultancy Corporate training and advisory services

Although an LLP may legally conduct various business activities, it may not be the most practical structure for ordinary commercial businesses such as trading, retail, manufacturing or expansion-focused businesses.

• LLP does not have shareholders or share capital in the same way as a Sdn Bhd

• Less Suitable for Businesses Seeking Investors

• Less Suitable for Multiple Outlets or Large-Scale Expansion

• Some Licenses, Grants and Tenders May Prefer Sdn Bhd over LLP

• Bank loans may be more difficult to obtain

• Requires at least two partners at all times

• Major changes may require amendments to the LLP agreement, which can result in additional professional costs. This may include changes to partners, profit-sharing arrangements, management responsibilities, capital contributions, partner remuneration or salaries.

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Requirements for Establishing an LLP

To establish a Limited Liability Partnership (LLP) in Malaysia, entrepreneurs must meet several basic registration requirements set by the Companies Commission of Malaysia (SSM).

Have at Least Two Partners	An LLP must be established by a minimum of two partners. The partners may consist of: Individuals; Companies or other body corporates; or A combination of individuals and body corporates.
Appoint a Compliance Officer	Every LLP must appoint at least one compliance officer, and must be at least 18 years old; Malaysian citizen or permanent resident; Ordinarily reside in Malaysia; and Be either a partner of the LLP or a person qualified to act as a company secretary.
Provide a Registered Office Address	The LLP must maintain a registered office in Malaysia. This address will be used for official correspondence, statutory notices and the keeping of certain business records. The registered office does not necessarily have to be the same as the LLP’s operating or business address.
Prepare the Partners’ Information	The following details of every proposed partner will generally be required: Full name; Identification card or passport number; Residential or registered address; Contact information; and Details of whether the partner is an individual or body corporate.
Prepare an LLP Agreement	The partners should prepare an LLP agreement setting out how the LLP will be managed. The agreement should cover matters such as: Capital contributions; Profit-and-loss sharing; Roles and responsibilities of each partner; Decision-making authority; Admission of new partners; Retirement or removal of partners; Dispute-resolution procedures; and Closure or dissolution of the LLP. Although the partners may rely on the default provisions under the LLP legislation, a properly drafted agreement is recommended to avoid misunderstandings and future disputes.

Duties and Responsibilities of an LLP Compliance Officer

The compliance officer is responsible for ensuring that the LLP complies with the Limited Liability Partnerships Act 2012 and the Limited Liability Partnerships Regulations 2012.

Duties and Responsibilities of an LLP Compliance Officer

Compliance Obligations of an LLP

Changes in Registered Particulars	Notify SSM within 14 days from the date of change
SSM Annual Declaration	First declaration: No later than 18 months from the LLP’s registration date. Subsequent declarations: Within 90 days after each financial year-end
Form PT  Annual income tax return	Within 7 months after financial year-end
Form CP204 Tax Estimation Form	At least 30 days before the beginning of the financial year Remark: The final tax estimate should not be less than 85% of the actual tax payable to avoid an underestimation penalty.
Form CP204A Revision of Tax Estimation	In the 6th, 9th or 11th month of the basis period
Form E and C.P.8D  Employer annual filing	By 31 March of the following year

Benefits and Challenges of Setting Up an LLP in Malaysia

Benefit of an LLP	Challenges of an LLP
Limited liability protection for partners	Requires at least two partners
Separate legal entity from its partners	Less suitable for large-scale expansion
Eligible for preferential tax rates	Unable to issue shares
Simpler statutory compliance requirements	May be more difficult to obtain loans or funding
Lower compliance cost compared to Sdn Bhd, do not need to appoint company secretary and auditor	Major changes may require amendments to the LLP agreement, resulting in additional professional costs

Frequently Asked Questions

Can a foreigner become a partner in a Malaysian LLP?

An individual or body corporate may generally become a partner, subject to applicable laws, immigration rules, professional regulations and the nature of the business.

However, the LLP must still appoint a qualifying compliance officer who meets Malaysia’s residence and eligibility requirements.

Does an LLP need a company secretary?

An LLP does not need to appoint a company secretary. It must instead appoint at least one compliance officer.

Does an LLP need audited financial statements?

An LLP is generally not required to appoint an auditor or submit audited financial statements to SSM. However, an audit may still be required by its partners, LLP agreement, bank, regulator or funding provider.

What tax return does an LLP submit?

An LLP submits Form PT as its annual income tax return.

Which Structure Should You Choose? Sdn Bhd or LLP

An LLP is generally suitable for professional practices, consultancies, joint ventures and service businesses operated by two or more active partners who want flexible management and profit-sharing arrangements.

A Sdn Bhd is generally more practical for normal commercial businesses that plan to obtain financing, bring in investors, open multiple outlets, form subsidiaries or expand on a larger scale.

Both structures are separate legal entities and provide limited liability protection, but they serve different ownership and growth needs.

Which structure is more suitable for large-scale expansion?

A Sdn Bhd is generally more suitable for businesses planning multiple outlets, subsidiaries, external investment or a group structure.