What Is an LLP in Malaysia? Features, Rules and Costs

By Axecta Management Services, Kuala Lumpur · Last verified: 29 October 2026

What an LLP is

A limited liability partnership is a business vehicle that combines features of a company and a conventional partnership. SSM describes it as a body corporate with its own legal personality and perpetual succession that can sue and be sued, hold and dispose of property and do whatever else a body corporate may lawfully do. Its partners get limited liability, like shareholders, while the internal rules are set by a partnership-style agreement rather than the detailed statutory regime of the Companies Act (SSM: starting an LLP.aspx)).

The governing law is the Limited Liability Partnerships Act 2012 (Act 743), supported by the LLP Regulations 2012. Section 6 allows any two or more persons, individuals or bodies corporate in whole or in part, associated to carry on a lawful business with a view to profit, to form one. Because the LLP is a separate person, its name must end with “Perkongsian Liabiliti Terhad” or the abbreviation “PLT” (section 13).

Key features at a glance

How liability works

Section 21 of the Act says any obligation of the LLP, whether in contract, tort or otherwise, is solely the obligation of the LLP, and that a partner is not personally liable for it solely by reason of being a partner. The LLP’s liabilities are borne out of the LLP’s property.

Three limits matter in practice:

1. Own wrongful acts. A partner remains personally liable in tort for their own wrongful act or omission, though not for another partner’s (section 21(3)). The LLP is liable to the same extent as the partner for acts done in the course of the business or with its authority (section 21(4)).
2. Distributions while insolvent. A partner or former partner who receives a distribution when the LLP is insolvent, or which makes it insolvent, and who knew or ought to have known, must repay it if winding up begins within two years (section 22).
3. Fewer than two partners. An LLP can carry on business with fewer than two partners for up to six months, or longer if the Registrar allows, up to one year at most (section 7). Beyond that, a partner who knew or ought to have known becomes personally and jointly liable, and the LLP and that partner commit an offence punishable by a fine of up to RM200,000.

A personal guarantee you give to a bank or landlord is your own contract and stays personal. See director personal liability for the company equivalent.

The LLP agreement

The mutual rights and duties of the partners are governed by the LLP agreement, in Malaysian or English language, which must include the LLP’s name, nature of business and each partner’s capital contribution (section 9). Where the agreement is silent on a topic covered by the Second Schedule, the default rules apply. Those defaults include equal sharing of capital and profits, every partner being entitled to take part in management, and no partner being entitled to remuneration for acting in the business unless agreed.

The tax angle makes the agreement more than a formality. LHDN’s PR 8/2022 says remuneration paid to partners is not deductible by the LLP if it is not specified in the LLP agreement. Draft remuneration, profit sharing, admission and exit of partners, and decision rules deliberately.

The compliance officer

Every LLP appoints at least one compliance officer. SSM’s general guidelines require the person to be a partner or someone qualified to act as a secretary, at least 18 years old, a Malaysian citizen or permanent resident, and ordinarily resident in Malaysia. A person cannot act if they are an undischarged bankrupt or disqualified from acting as a director or secretary (section 28).

The officer lodges documents for the LLP, registers changes in particulars (within 14 days), keeps the registers and statutory documents at the registered office and displays the LLP’s name and registration number outside the registered office and place of business. Under section 27(7) the compliance officer is personally liable to penalties for contraventions of those duties unless they satisfy the court otherwise. If none is appointed, all partners are deemed to be compliance officers. LHDN’s ruling adds that the compliance officer, or partners, are responsible for income tax filings of the LLP.

Professional LLPs

A professional practice can form an LLP only if its partners are natural persons practising the same professional practice, and the LLP holds professional indemnity insurance at or above the amount approved by the Registrar, after consulting the governing body where one is specified (section 8). The First Schedule lists the practices and governing bodies: chartered accountants (Malaysian Institute of Accountants), advocates and solicitors (Malaysian Bar, Sabah Law Association and the Sarawak association named in the Act) and secretaries. The application must carry the governing body’s approval letter, and a partner who is disqualified from the profession ceases to be a partner.

Records, filings and costs after registration

• Annual declaration. Lodged within 90 days of the financial year-end, signed by any two partners, stating whether the LLP can pay its debts as they fall due. The first is due within 18 months of registration.
• Registers kept at the registered office. Notice of registration, partner and compliance officer register, latest annual declaration, LLP agreement and amendments, and charge instruments.
• Accounting records. Sufficient to explain transactions and produce profit and loss accounts and balance sheets, kept for at least seven years.
• Tax return. LHDN’s 2026 filing programme lists Form e-PT for LLPs, due within 7 months after the close of the accounting period, with e-filing mandatory since YA 2021 (programme).
• Cost. SSM’s guidelines state a registration fee of RM500, for both new registration and conversion. The annual declaration fee is not stated on the pages reviewed; check SSM’s table of fees.

How an LLP is taxed

LHDN taxes an LLP at the LLP level and treats it as a “person” under the Income Tax Act. Partners are not taxed on their share of LLP income, whether distributed or not; they are taxed on remuneration, perquisites and benefits received. Under PR 8/2025 (published 22 December 2025) an LLP pays the general 24% but can use lower preferential rates if it is resident and registered in Malaysia, has capital contribution not above RM2.5 million at the start of the basis period, gross business income not above RM50 million and passes the shareholding tests, including the 20% foreign-ownership test from YA 2024. From YA 2023 those rates are 15% on the first RM150,000, 17% up to RM600,000 and 24% above.

Worked example (illustrative, based on LHDN’s own figures)

PR 8/2022 gives an example of an LLP with three partners each paid RM10,000 a month. The LLP’s profit after operating expenses is RM2,500,000 and remuneration paid is RM360,000.

The partners are still individually taxed on the remuneration either way, so the missing clause costs the group tax twice. The ruling example predates PR 8/2025, but the principle stands.

Who tends to choose an LLP

• Professional practices that are allowed to form one, such as accountants and law firms.
• Consultancies, agencies and small service firms with two or three founders who do not plan to issue shares.

An LLP is less suited to businesses that expect outside equity investors, share option plans for employees, or counterparties that insist on a company. Compare in Sdn Bhd vs LLP vs sole proprietorship and LLP vs Sdn Bhd liability and costs.

Foreign involvement

Partners may be bodies corporate, so a foreign company may be a partner, subject to sector licensing. The compliance officer must still be a Malaysian citizen or permanent resident ordinarily resident in Malaysia. For tax, PR 8/2022 treats an LLP as resident if management and control are exercised in Malaysia at any time in the basis year.

Common mistakes

• Registering an LLP with a compliance officer who later leaves, then never lodging a replacement. The officer vacates one month after lodging a notice, and the LLP’s lodgments stall.
• Leaving partner remuneration out of the agreement (see the example above).
• Missing the 14-day change notification when a partner joins, leaves or the address changes. The Act sets offences with daily continuing fines.
• Forgetting the annual declaration because there is no audit or annual return. Use the same diary approach as the company compliance calendar.
• Treating the LLP as a shield for personal guarantees, own wrongful acts or distributions made while insolvent.

How Axecta helps

Axecta registers LLPs through our incorporation service, reviews the draft LLP agreement against the tax points above, acts as an independent view on whether an LLP or Sdn Bhd fits, and can set up the diary for annual declarations, change notifications and tax returns. Where the plan includes investors or a share scheme, we say so early and prepare a Sdn Bhd instead.

Next steps

1. Confirm there are at least two partners and decide who will be compliance officer.
2. Agree the LLP agreement, including capital, profit share and remuneration.
3. Read how to register an LLP and the structure checklist.
4. Set calendar reminders for the 14-day change notice, 90-day declaration and tax return.

Frequently asked questions