Understanding Limited Liability Partnership (LLP)

A Limited Liability Partnership (LLP) is a business structure in Malaysia that combines the benefits of a traditional partnership and a private limited company. It is governed by the Limited Liability Partnerships Act 2012 and is increasingly popular among small and medium-sized enterprises (SMEs) due to its flexible structure and reduced compliance requirements.

What makes an LLP unique is the distinction between its partners and the business entity. An LLP is a separate legal entity, meaning it can own property, enter into contracts, and be sued or sue in its own name. The liability of its partners is limited to their agreed contributions, protecting their personal assets from the debts and obligations of the business.

An LLP requires at least two partners, who can be individuals or corporate entities. While all partners may actively participate in managing the business, an LLP also allows for silent partners who contribute financially but may not engage in day-to-day operations. This makes it a flexible option for businesses looking to balance managerial expertise with financial investment.

Registering an LLP in Malaysia is done online through the Companies Commission of Malaysia (SSM). It involves submitting relevant details about the business, partners, and compliance officer, with registration typically completed within a few days.

The LLP structure is ideal for professional services firms, startups, and businesses seeking a cost-effective way to limit liability while retaining operational flexibility. With fewer compliance requirements compared to a private limited company (Sdn Bhd), it offers a straightforward and efficient way to conduct business in Malaysia.