What is an LLP and how do I get one?
Limited Liability Partnerships (LLP) are a type of business vehicle that combine the characteristics of a traditional company and that of a conventional partnership, in what many consider to be the best of both worlds.
LLPs are still relatively new in Malaysia (the LLP act was only gazetted in 2012) and still remarkably unknown for something so useful. Unfortunately, this also means it is often misunderstood by those who should know better, including banks and government departments. There is a lot of incorrect information floating around about some aspects, and a complete lack of information about others.
To help provide some clarity, we are going to explain how to register LLPs In Malaysia, and why you would want to. It took us a bit of time and effort to figure this out, so we hope this guide saves some of you some trouble, especially if you are Sdn Bhd veterans like us. Obviously, this is just based on our experiences and what we've learned from our consultants, so we do recommend you seek professional advice to double check everything.
Who needs an LLP?
So first things first, what's an LLP exactly and who needs one? Essentially, any lawful business that seeks to make a profit and needs a business vehicle to do so can be an LLP. Other choices would be a sole proprietorship, a partnership and a limited liability company (Sdn. Bhd.).
The main reason you would want an LLP vs other forms of business vehicles is that LLPs provide for limited liability, similar to that of a Sdn. Bhd., but at the same time has much simpler reporting requirements and flexibility similar to that of a conventional partnership or sole proprietorship.
An LLP is legally a body corporate and can do anything that a legal entity can do, including suing, being sued, holding assets and so on. This makes it much more useful than a sole proprietorship or general partnership as those are not legal entities in themselves and come with unlimited liability (you can be personally liable for everything your business does).
At the same time, unlike a company, tasks like annual audits and AGM's are not compulsory for LLPs, making them cheaper and simpler to maintain. There are also far fewer documents to take care of as LLPs do not come with Memorandum & Articles of Association, Form 9, 24, 44, 49 and so on. Instead, you have a certificate of registration and a partnership agreement which, surprisingly enough, lays out the terms which the partners have agreed on.
Finally, an LLP is likely to be much cheaper to maintain and register than a Sdn. Bhd. (but slightly more expensive than a sole proprietorship or partnership), given that you may not have to pay for annual audits, annual general meetings, company secretary fees and so on (unless you choose to via your partnership agreement). The registration fee itself is RM 500, and the only annual filing requirement with SSM is an annual declaration of solvency which costs RM 200.
If any current shareholder's of a Sdn. Bhd. are reading this and thinking 'this sounds good!', you should know that it is possible to convert a Sdn. Bhd. to an LLP, but not vice versa, so you need to be sure its the right move for you before you proceed, because its a one way street.
More detailed information about LLPs from the Companies Commission can be found here.
How do I register an LLP in Malaysia?
Theoretically, the process of registering an LLP is much simpler than for Sdn Bhds, although its a bit let down by poor instructions from SSM and their misguided website, which is apparently now in its 2nd iteration.
In the case of Sdn Bhds, its generally not worth the hassle of registering it yourself, so most people hire a professional service to do all the running around (we've done that many times), but in the case of LLPs the process is such that there is little difference in effort either way, so you might as well do it yourself. The trick is figuring out how to actually do it, which is what this article is for.
So first of all, in order to register an LLP you will need the following information:
1. Two or more partners (apparently there is no maximum limit to this but their forms won't accommodate all that many) and their personal details.
2. A name for your LLP (the official name will end with PLT (Perkongisian Liabiliti Terhad), i.e. Apple PLT or Honeyburger PLT). The good thing here is that since the LLP register is pretty new, most names are still up for grabs unlike with conventional companies where its quite easy to clash with existing company names.
3. Proposed registered office of the LLP.
4. The general nature of the proposed business of the LLP.
5. The name and details of the chosen compliance officer(s) of the LLP. This can be a qualified company secretary or it can simply be one (or more) of the partners of the LLP. The compliance officer is legally responsible for all the compliance requirements of the LLP such as maintaining records, making annual declarations and keeping information up to date.
6. In the case of an LLP formed for professional practices such as chartered accountants, advocate and solicitors or company secretaries, an approval letter from their respective governing bodies will also be needed.
Now that you have your information ready, go to SSM's LLP website at https://myllp.com.my/.
The MYLLP website, Round 1
Click the 'sign up' link and you'll see these forms.
Like many forms in Malaysia, these come with no instructions at all. Fortunately, they are relatively straightforward apart from a couple of things.
1. Under 'User Type', there are a few options. General User, Government Agency, Verified Professional User and Verified User. Is is very unclear which option you're supposed to choose, but as it turns out, to register an LLP you need to choose the verified user option. General Users can't register for LLP's, they can only purchase information. But they don't tell you any of this because they like to keep things mysterious.
2. In the 'Documents' section, there is no information about what kind of document you need to upload, but that's ok, because you don't actually need to upload anything at all. So just click next without doing anything.
Next you will receive two emails. The first asks you to verify your email, and the second asks you to go to the SSM office in person to verify your identity.
The first email can be a source of frustration, because it instructs you to click on the link and log in to verify your email address. Unfortunately, if you try to do this you won't be able to log in, and it will say your details are wrong. So naturally you think you've somehow messed your password up, and go through the whole process again. Only to find the same thing happens. Ten hours later, you've created three hundred and fifty six accounts and are no closer to logging in.
It turns out that you can't actually verify your email until you've verified your identity at SSM, but continuing with SSM's theme of wonder and mystery they don't tell you this. So ignore the first email for now, and find some time to make your way to the SSM building.
Rather helpfully, they don't give you a list of addresses in the email, but if you've managed to get this far in the process you've already proven yourself to be an investigator worthy of Sherlock Holmes so that shouldn't be a problem. Just in case, here is a list of SSM offices.
For those based in the Klang valley, the nearest SSM office will likely be at Menara SSM, No 7, Jalan Stesen Sentral 5.
The SSM Office
Enter the building and head straight to the 17th Floor. You don't need to bother with registration or anything like that.
Once you're in the office, just ask the information counter to point you to the right counter for verification. They might ask you to take a number, but the number system didn't seem to work very well when we were there (i.e. it never moved). It was easier to just ask the counter directly when there wasn't anyone waiting.
The actual verification takes less than 5 minutes. Just provide your confirmation number (from the email), your identity document, and your professional certificates/licenses if applicable.
And that's it, hopefully you can be in and out within half an hour if there isn't a queue.
Not too long after that, you should receive an email informing you that your account has been activated. So its time to head back to the MyLLP website to complete the process.
The MYLLP website, Round 2
Remember the first verification email a few paragraphs ago, where you couldn't log in? You should be able to log in successfully now that your account is activated.
Here's where we can save you RM 30 and a couple of days waiting time.
Click on E-Forms -> Register LLP.
The wording here implies that you first need to reserve your LLP name, and then input the registration number to proceed with your registration. That entails clicking on 'Reserve LLP Name' where you search for your desired LLP name and reserve it, paying RM 30 and waiting a day or more for approval before you can proceed with actual registration.
However, there is an unexplained box at the top of the form labelled Direct Registration. Click that, and you'll be able to register your LLP immediately with your chosen name in one step, bypassing all that hassle and saving the reservation fee as well as a day or more of your time. Why they don't have this as default and instead chose to make it a secret Easter egg is yet another mystery beyond the understanding of simple mortals like us, but at least now we know!
Filling in the actual form is pretty straightforward, so we won't bother going step by step through that.
The only things to note are that:
1. You'll need the details of at least 2 partners for an LLP, and at least one of them (or a company secretary) will need to be registered as a compliance officer.
2. In the business code section you'll need to choose the most relevant codes that describe the type of business you intend to conduct. Its not the most comprehensive list ever, nor the most modern, so if you're involved in something to do with technology or the internet you may find it hard to find relevant codes, but just do your best and go for the closest matches you can find. You can choose up to 3 codes on the website.
Once you've submitted your form, you'll need to pay the RM 500 registration fee, which you can do immediately online. Following that, you'll get confirmation of your application, and then you just wait.
If you made any mistakes or omissions on your form you will get an email from SSM telling you to make the necessary amendments. Otherwise, within a few days you should be receiving a notification of approval and you're the proud owner of a new LLP!
Obtaining your Registration Certificates
For those used to Sdn. Bhd.'s it may feel a little weird, as you won't have a single piece of paper at this point documenting your LLP. Unfortunately, your registration fee does not include these luxuries.
You have 2 choices now, either you can head back to SSM to purchase your certificates, or you can purchase them online.
If you head to SSM, you'll need to fill out a request form at the counter, pay RM 47.70, cash only, and then wait a few days before making yet another trip to collect them.
Given how troublesome that is, it might seem obvious that you should instead purchase the certificates online. However, SSM as always moves in mysterious ways, so there's a significant catch to this.
To purchase your certificates online you'll need to log in to your MyLLP account and click on the Buy Now link.
Type in the name of your LLP and you'll be able to see the selection of documents that you can buy. For the purposes of opening a bank account you'll need at least your Certificate of Registration and your LLP Current Profile (containing the details of your registration). This costs RM 20 each, plus tax.
In the payment section you'll confirm your postal address, and make your payment.
Now, the interesting catch here is this: they won't actually send you anything, despite asking for your mailing address. What you will get instead is an email saying that your documents are available for download without any mention of whether a paper copy is being sent. Some people wait a couple of weeks, thinking that a mailed certificate is forthcoming, so hopefully this will save you some time and crushed hopes: your payment essentially gives you the privilege of printing out your own certificate.
We talked to people at SSM and they say that self printed certificates should be accepted by banks and government institutions anywhere, but they are well aware that 'should' isn't quite the same as 'will'.
In our experience, you can get by with self printed certificates, but it really depends on who you're dealing with and if they are familiar with LLPs. Technically, all relevant parties in Malaysia should be aware of and up to speed on the necessary procedures and documentation. But you know how it is. So if they aren't, it may take a bit of extra time and effort while they sort things out.
Congratulations!
And that should be it! You've registered your spanking new LLP, have your certificates in hand and are ready to do business.
Hopefully this post has helped you a bit with some of the less obvious parts of the process.
You'll probably need to open a bank account for your LLP as well. We might write a post on this at a later point in time if it turns out people are having problems doing so.
Your new business might also need website development, copywriting and/or design services, which happens to be right up our alley. If you think we can help, just get in touch for a chat!
