CONVERTING SDN BHD TO LLP ACCORDING TO LIMITED LIABILITY PARTNERSHIP ACT 2012
Oleh AZIZAM AZIZAN
What is LLP or PLT?
A LLP is an alternative business regulated under the LLP Act 2012 that combines the characteristics of a conventional company and partnership. LLP’s offer similar advantages to private limited companies (Sdn Bhd) suchasLimited Liability, Perpetual Legal Existence but with lower compliancecostsdue to the lack of statutory compliance – not required to have audited accounts& appoint a qualified Company Secretary.The LLP business structureisdesigned for all lawful business purposes with a view to make profit. LLPmayalso be formed by professionals such as Lawyers, Chartered Accountants and Company Secretaries for the purpose of carrying on their professional practice. The LLP concept will also support start ups, small and medium enterprises(SMEs) to grow their businesses without having to worry too much on their personal liabilities, personal assets and strict compliance requirements
Procedures for conversion to LLP
- The Name and registration number of the private company;
- The date on which the private company was incorporated under the Companies Act 1965 or 2016;
- That as at the application date, the private company appears to be able to pay its debts as they become due in the normal course of business;
- That as at the application date, all outstanding statutory fees or any amount owing to any government agency has been settled;
- That 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;
- That all the creditors have agreed with the application to convert to LLP
- All shareholders agree with the application to convert to LLP
- Name of proposed LLP;
- General nature of proposed business of LLP;
- Proposed registered office of LLP;
- Names and details of every person who is to be a partner of LLP;
- Names and details of compliance officers of LLP
Before Register LLP in Malaysia. Find out the following LLP information that need to provide
- LLP name. Need to get approval for new LLP name.
- Partners. Need to have at least two partners but the maximum number of
partners is not limited. Partners can consist of individuals (neutral persons)
or corporate bodies or a combination of both. There is no requirement for
partners to have their primary residence or only in Malaysia except
partners acting as LLP compliance officers - Pegawai Pematuhan. Under the LLP Act 2012 there is a requirement for
LLP to appoint at least one LLP compliance officer. The Compliance
Officer must be among the partners who are at least 18 years old and who
are citizens or permanent residents of Malaysia and often reside in
Malaysia. - Registered address. Must have a registered office in Malaysia where all
communications and notices can be addressed. It can be a residential or
commercial building, but it doesn’t have to be just a mailbox. - Taxation. The imposition of LLP Tax is similar to Companies Income tax
will be charged at the LLP level. LLP resident in Malaysia, with a full capital
contribution (either in cash or in kind) worth RM2.5 million or less in the
base period for one year of assessment can enjoy a lower tax at the rate of
20% for every first RM500,000 chargeable to his income
Effects of Converting to LLP (Section 33 LLP Act 2012)
- Conversion to a limited liability partnership, means the transfer of property,
interests, rights, privileges, liabilities, obligations and business of a
conventional partnership/private company to a limited liability partnership. After the conversion, the conventional partnership or private company is
considered dissolved. - Assets – All assets previously held by conventional partnerships/Sdn Bhd
will be transferred to LLP. - Pending proceedings – All pending proceedings may still be continued, resolved and enforced upon or by the LLP.
- Existing Agreements/Contracts – Existing agreements/contracts and so on,
including employment contracts are still in effect as if LLP is the relevant
party. - Liability & Obligations – partners in a conventional partnership or Sdn Bhd
still continue to bear responsibility (jointly or separately with the LLP) for
the liabilities and obligations imposed before the conversion. - Permits or Licenses – LLPs that go through the conversion process need
to re-apply for approvals, permits or licenses issued under written law to
conventional partnerships or private companies effective immediately
before the date of registration of the Limited Liability Partne
