Understanding Partnership

Partnership in Malaysia represents a legal and prevalent business structure where two or more individuals, up to a maximum of twenty, jointly own a business. Governed by the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia) and the Registration of Businesses Act 1956, partnerships offer a simplified and direct approach to business ownership and operation.

 

Registration and Structure

To establish a partnership, all owners must be Malaysian citizens or permanent residents, as foreign individuals and corporate entities are ineligible. The registration process is streamlined and cost-effective, emphasising the partnership’s appeal to small or newly established businesses exploring new strategies or markets. Notably, a partnership transforms into a sole proprietorship if only one owner remains.

 

Benefits and Operational Aspects

Partnerships are distinguished by their low annual maintenance costs, absence of corporate tax payments, and minimal formal business requirements, making them an attractive option for micro and small businesses. The shared responsibility model allows partners to leverage their individual strengths, enhancing the business’s operational efficiency.

Do keep in mind that a general partnership is an ownership model; it doesn’t stand as a separate legal entity. However, in Malaysia, a special kind of partnership is also allowed, known as the Limited Liability Partnership, which offers protection to personal assets. Finally, should the need arise, winding up the partnership is a straightforward process, requiring a visit to the SSM office.

 

Registration Procedures

Registration necessitates a personal visit to the nearest SSM office by the business owners, accompanied by identity documentation and details of the proposed business. Following a name check and payment of the annual fee, the partnership certificate is issued within an hour, marking the official commencement of the business.