Open a Partnership in Malaysia
Updated on Monday 12th July 2021
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One of the options through which an investor can start a business in Malaysia is by registering a partnership. The local legislation prescribes several requirements when choosing this legal entity and our team of specialists in company formation in Malaysia can provide an in-depth presentation on this matter; our specialists can offer legal representation during the registration of any type of partnership in this country.
Foreign investors should know that the registration procedure available for a partnership in Malaysia is performed following the same steps imposed when opening a sole trader, as both business forms are set up by natural persons. These business forms may be registered in Malaysia for the purpose of trade, commerce or craftsmanship or for any other type of activity that can provide a financial gain.
Registering a partnership in Malaysia
Those who are interested in opening a partnership in Malaysia should know that the registration process is handled by the Companies Commission Malaysia (SSM), an institution where all companies incorporated here have to register, following the basic steps presented in the list below:
- complete the Business Registration Form, which can be done by using a personal name or a trade name;
- if the latter applies, the investor will need to submit the Form PNA.42 for the registration of the company’s trading name;
- obtaining an approval for the proposed trading name, as per the stipulations of the Rules 15, Rules of Business Registration;
- the registration of the business has to be concluded for a period of minimum one year and maximum five years.
A partnership in Malaysia is a type of business which requires at least two partners (and up to 20), which should be registered with the SSM by following the above mentioned rules. The registration of a local business can be completed at any of the SSM offices, but investors also have the option of registering it using an online portal, the ezBiz Online Services.
When opening a company in Malaysia, the investors should provide information on the company’s main business activities, as well as details regarding the founders (such as copies of the investors’ identity cards). A partnership in Malaysia can be registered in a period of one hour (the procedures handled by the SSM) and it is necessary to know that this business structure provides unlimited liability for the company’s founders, but there is a possibility to reduce the liability level by registering a limited liability partnership.
An important aspect of the local legislation is that foreigners should have a permanent residence permit issued by the local authorities in order to register a company in Malaysia, as sole proprietorships and partnerships can’t be established by foreign citizens; our team of consultants in company formation in Malaysia can offer more details on this matter. We can also put you in touch with other foreign experts in company incorporation who are our local partners, including Bahrain.
More details on the registration of a partnership in Malaysia are available in the following video:
Limited liability partnership in Malaysia
Those opening a partnership in Malaysia have the possibility of registering a limited liability partnership. This legal entity represents a combination between the classic characteristics of a partnership, in which the company’s founders are held liable with their own assets for the losses of the company, with the ones of a corporate structure, in which the founders benefit from limited liability. The limited liability partnership (LLP) represents a small percentage of all the businesses registered in this country, the following data being available in this sense:
- at the end of 2018 (data includes registrations up until 31st of December), the total number of limited liability partnerships accounted for 18,797;
- the number of limited liability partnerships is higher compared to the number of foreign companies operating here, which, at the end of 2018, accounted for 4,803;
- for 2019, the highest number of partnerships registered with the SSM in a month was of 407, in the month of April, 2019;
- the lowest number of partnerships was registered in February 2019, when the SSM registered only 218 partnerships;
- throughout 2019, the total number of partnerships incorporated in Malaysia (registered as limited liability partnerships) accounted for 3,943.
How can one register a Malaysian LLP?
Local and foreign businessmen who want to open a company in Malaysia that is incorporated as LLP will need to follow the same steps that are available for the registration of a partnership. The basic requirement is to have at least two partners who will act as the founders of the LLP.
The incorporation is done in accordance with the stipulations of the LLP agreement, the statutory document of this type of legal entity, which can be presented at length by our team of specialists in company formation in Malaysia. This business structure is open for a wide category of business activities and to numerous professionals. It can also be used as a way to start a small and medium-sized company in Malaysia.
In order to register a Malaysian LLP, investors must prepare a suitable business name and to provide information on the nature of the business activities that will be carried out through the partnership. The SSM will require additional information, such as: the registered address of the LLP, personal information of the founding partners and the name and personal details of the compliance officer.
A compliance officer is the entity who will handle the registration process, a person who must be approved for this procedure. The compliance officer must be a person who has the following characteristics: it can be represented by one of the founding partners or by a person who respects the definition of a secretary under the stipulations of the Company Act; the person must also have an age of at least 18 years old and he or she must satisfy specific residency requirements.
For this purpose, the compliance officer can be a person who is a Malaysian citizen or a person who was granted with the permanent residency status. At the same time, in order to be allowed to conclude the registration steps, the person should be living in Malaysia on a constant basis. If these conditions are met, the LLP can be easily registered with the SSM, once the registration fee, of RM 500, is paid along with the registration documents.
Once the LLP is registered with the SSM, where the entity will receive a certificate of incorporation, its founders should conclude other registration steps with other relevant institutions. For example, it is necessary to register for taxation, a procedure done with the Inland Revenue Board of Malaysia. For employment purposes, the LLP has to be registered with the Employees’ Provided Fund and with the Social Security Organization.
Can a company type be changed into a LLP in Malaysia?
Yes, there are several company types which can be modified into a LLP in Malaysia. This applies in the case of a conventional partnership, presented at the beginning of the article, and to a private company. Our team of consultants in company formation in Malaysia can provide in-depth advice on the legal procedure of modifying the legal entity of a business operating here.
The application for the modification has to be done by the compliance officer and the procedures to change the legal entity will vary based on the company type that will be changed into a LLP. When changing a conventional partnership into a LLP, the following information is required:
- the name and the registration number of the partnership incorporated in Malaysia;
- the registration date of the conventional partnership and the current financial situation of the structure;
- the new proposed name of the LLP and the business activities that will be carried out under the new structure;
- the proposed registered office of the LLP and the names of the partners forming the LLP;
- personal details of the LLP partners and name and personal details of the compliance officer.
The basic advantage of this business structure refers to the fact that its founders will have limited liability for any corporate debts, just like in the case of a company with legal personality. Persons who need to receive more information on how to open a partnership or how to set up a company can address to our team of representatives in company incorporation in Malaysia for assistance. Our experts can also provide advice on the taxation requirements imposed to any business form available under the local legislation and may assist in opening a company in Malaysia, regardless of the business form of interest. If you want to open a partnership in another country, such as Argentina, we can put you in touch with our local partners.