LLP Agreement (Malaysia)
LIMITED LIABILITY PARTNERSHIP AGREEMENT
Limited Liability Partnerships Act 2012 (Act 743) | Contracts Act 1950
THIS LLP AGREEMENT is entered into on [Agreement Date]
BETWEEN:
(1) [Partner 1 Name], of [Partner 1 Address] (Designated Partner: [Partner 1 Designated]) ("Partner 1"); AND
(2) [Partner 2 Name], of [Partner 2 Address] (Designated Partner: [Partner 2 Designated]) ("Partner 2").
The partners are collectively referred to as "the Partners".
1. ESTABLISHMENT AND REGISTRATION
1.1 The Partners have registered [LLP Name] (SSM Registration No.: [LLP Registration Number]) ("the LLP") as a Limited Liability Partnership under the Limited Liability Partnerships Act 2012 with a registered office at [Registered Office].
1.2 The LLP carries on the business of [Business Nature]. Any material change to the nature of the LLP's business requires the unanimous consent of all Partners.
1.3 The LLP is a body corporate with a legal personality separate from its Partners. The LLP has perpetual succession and the capacity to own property, to sue and be sued, and to enter into contracts in its own name under Section 4 of the LLP Act 2012.
1.4 This Agreement governs the internal relationship between the Partners and between the Partners and the LLP. In any matter not addressed by this Agreement, the default provisions of Schedule 1 to the LLP Act 2012 apply.
2. CAPITAL CONTRIBUTIONS
2.1 Each Partner shall contribute the following capital to the LLP: Partner 1: [Partner 1 Capital]; Partner 2: [Partner 2 Capital]. Capital contributions shall be credited to each Partner's capital account.
2.2 A Partner shall not withdraw their capital contribution without the unanimous consent of all Partners. Additional capital calls shall require the unanimous consent of all Partners and shall be made in proportion to existing profit-sharing ratios unless otherwise agreed.
3. PROFIT AND LOSS SHARING
3.1 The net profits and losses of the LLP shall be shared between the Partners as follows: [Profit Ratio].
3.2 Management fees: [Management Fee]. These amounts shall be charged as expenses of the LLP before division of profits.
3.3 Each Partner's share of LLP income is taxed in the hands of the individual Partner under the Income Tax Act 1967. The LLP shall file an annual composite tax return (Form PT) with the Inland Revenue Board of Malaysia (LHDN).
4. MANAGEMENT AND GOVERNANCE
4.1 Ordinary decisions shall be made by [Ordinary Decisions]. The following matters are extraordinary decisions requiring [Extraordinary Decisions].
4.2 Each Partner is an agent of the LLP for the purpose of the LLP's business under Section 8 of the LLP Act 2012. A Partner's authority to bind the LLP to transactions in excess of RM 50,000 requires the prior written approval of the other Partners.
4.3 The designated partners ([Partner 1 Designated] for Partner 1; [Partner 2 Designated] for Partner 2) are responsible for maintaining the LLP's statutory records and filing the annual declaration with SSM under Section 68 of the LLP Act 2012.
5. LIABILITY, RETIREMENT AND DISSOLUTION
5.1 No Partner shall be personally liable for the debts, obligations, or liabilities of the LLP arising in contract, tort, or otherwise, beyond their agreed capital contribution, pursuant to Section 9 of the LLP Act 2012. Each Partner remains personally liable for their own wrongful acts or omissions under Section 10.
5.2 A Partner may retire from the LLP by giving [Retirement Notice] to all other Partners. Upon retirement, the retiring Partner's interest shall be valued by the method: [Buyout Valuation], and the payment terms shall be agreed in writing.
5.3 The LLP may be wound up voluntarily by unanimous resolution of all Partners, or by order of the High Court of Malaya on grounds set out in Section 55 of the LLP Act 2012.
5.4 This Agreement is governed by Malaysian law. Disputes shall be referred to the High Court of Malaya or to arbitration under the Arbitration Act 2005 at the Asian International Arbitration Centre (AIAC).
Partner 1
________________
Signature
Partner 2
________________
Signature
What Is a LLP Agreement (Malaysia)?
A LLP Agreement in Malaysia sets out the rights and obligations the parties agree to be bound by.
The LLP Act 2012 came into force on 26 December 2012, enabling professionals and businesses to operate with limited liability without the formalities of a company under the Companies Act 2016. An LLP is registered by filing the prescribed application form with SSM, paying the registration fee of RM 500, and lodging the LLP Agreement or a statement that the LLP will be governed by the default provisions of the LLP Act 2012.
The LLP Agreement governs the internal relationship between partners and between the partners and the LLP. In the absence of an LLP Agreement, the default rules in Schedule 1 to the LLP Act 2012 apply. Schedule 1 provides, among other things, that profits and losses are shared equally, that no partner is entitled to remuneration for acting in the business of the LLP, and that decisions are made by majority vote of all partners for ordinary matters and by unanimous consent for changes to the nature of the business.
Under Section 8 of the LLP Act 2012, every partner is an agent of the LLP for the purpose of the LLP's business, and the LLP is bound by acts of partners done in the ordinary course of the LLP's business. A partner's authority may be restricted by the LLP Agreement, and third parties who have actual notice of the restriction are not entitled to rely on the partner's ostensible authority.
For income tax purposes, an LLP in Malaysia is taxed as a transparent entity — each partner's share of LLP income is taxed in the hands of the individual partner or corporate partner under the Income Tax Act 1967, in the same manner as a conventional partnership. The LLP files a composite income tax return with LHDN under Form PT.
The legal framework governing the LLP Agreement (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a LLP Agreement (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Act 2016 (Act 777) sets the foundational requirements.
When Do You Need a LLP Agreement (Malaysia)?
An LLP Agreement is required in Malaysia whenever a Limited Liability Partnership is established with SSM and the partners wish to customise the governance of the LLP beyond the default rules in Schedule 1 to the LLP Act 2012.
An LLP Agreement is needed when two or more professional service providers — architects registered with the Board of Architects Malaysia (LAM), engineers registered with the Board of Engineers Malaysia (BEM), or accountants registered with MIA — establish a professional LLP to practise their profession with the benefit of limited liability protection.
An LLP Agreement is required when the founding partners wish to specify unequal profit-sharing ratios, capital contribution requirements, management salaries, or voting thresholds that differ from the equal-sharing defaults in Schedule 1 to the LLP Act 2012.
An LLP Agreement is needed when the LLP raises external financing, as lenders regulated by Bank Negara Malaysia require sight of the LLP Agreement to assess the LLP's governance, the partners' authority to grant security, and the LLP's compliance with Section 20 of the LLP Act 2012 on charges.
An LLP Agreement is required when a partner invests capital in the LLP and the partners need to document the capital account structure, the basis for calculating each partner's interest in the LLP, and the mechanisms for admitting new partners or buying out retiring partners.
An LLP Agreement is needed when the partners wish to impose non-compete and non-solicitation obligations on each other and on departing partners, to protect the LLP's client relationships and goodwill after a partner exits.
Parties in Malaysia should prepare a LLP Agreement (Malaysia) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your LLP Agreement (Malaysia)
A valid LLP Agreement for a Malaysia LLP must contain the following essential elements under the LLP Act 2012.
LLP Identity: The registered name of the LLP (which must end with 'LLP' or 'PLT' — Perkongsian Liabiliti Terhad — under Section 14 of the LLP Act 2012), the SSM registration number, the registered office address in Malaysia, and the nature of the LLP's business.
Partners: Full names, NRIC or company registration numbers, and addresses of all partners at the time of the Agreement. The LLP Act 2012 does not restrict the number of partners or require any partner to be ordinarily resident in Malaysia, unlike the Companies Act 2016's director residency requirement.
Capital Contributions: Each partner's capital contribution, the basis on which capital accounts are maintained, and the procedure for calling additional capital contributions. Partners may contribute cash, property, or services under Section 5 of the LLP Act 2012.
Profit and Loss Sharing: The ratio for sharing profits and losses, departing from the default equal sharing in Schedule 1 if appropriate. The Agreement should also address drawings, management fees, and the timing of distributions.
Management and Voting: The structure of the management committee or designated partners, voting thresholds for ordinary and extraordinary decisions, and reserved matters requiring unanimous consent. Under Section 8 of the LLP Act 2012, every partner is an agent of the LLP.
Designated Partners: Identification of the designated partners responsible for filing the LLP's annual declaration with SSM under Section 68 of the LLP Act 2012 and for maintaining the LLP's statutory records. The LLP must have at least two designated partners at all times.
Admission and Retirement of Partners: Procedures for admitting new partners (including required consent percentages and capital contribution obligations) and for partners to retire, including notice periods and the valuation and payment of the retiring partner's interest.
Liability: Confirmation that partners are not personally liable for the LLP's debts beyond their agreed contribution under Section 9 of the LLP Act 2012, except where a partner is personally liable for their own wrongful acts or omissions under Section 10.
Governing Law: Malaysian law under the LLP Act 2012, with disputes referred to the High Court of Malaya or arbitration under the Arbitration Act 2005 at the AIAC.
Additional compliance elements for a LLP Agreement (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). LLP Agreement (Malaysia) (Malaysia) [Legal document template]. Forms Legal. https://forms-legal.com/malaysia/business/partnerships/llp-agreement-malaysia
"LLP Agreement (Malaysia) (Malaysia)." Forms Legal, 2026, https://forms-legal.com/malaysia/business/partnerships/llp-agreement-malaysia.
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title = {LLP Agreement (Malaysia) (Malaysia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/malaysia/business/partnerships/llp-agreement-malaysia}},
note = {Free legal document template. Based on Companies Act 2016 (Act 777)}
}Also available for these jurisdictions:
Frequently Asked Questions
An LLP (Limited Liability Partnership) registered under the LLP Act 2012 and a Sdn. Bhd. (private limited company) incorporated under the Companies Act 2016 are both separate legal entities with limited liability for their owners, but they differ significantly in structure, governance, and tax treatment. An LLP is governed by the LLP Agreement and the LLP Act 2012 — it has partners rather than shareholders, and its internal governance is more flexible with fewer statutory formalities. A Sdn. Bhd. has shareholders and directors, must hold AGMs (unless exempt), maintain statutory registers, file annual returns with SSM, and comply with the full requirements of the Companies Act 2016. For tax purposes, a Sdn. Bhd. pays corporate income tax at 24% (or 17% on the first RM 600,000 for SMEs), whereas an LLP is transparent — partners pay tax on their share of LLP income at their individual or corporate rates. An LLP is generally preferred by professional service firms and small businesses seeking simplicity and tax transparency, while a Sdn. Bhd. is preferred when seeking investment, issuing shares to employees, or planning for growth and eventual listing.
Under Section 9 of the LLP Act 2012, a partner of a Malaysian LLP is not personally liable, solely by reason of being a partner, for any obligation or liability of the LLP, whether arising in contract, tort, or otherwise. The LLP itself is liable for its debts and obligations as a separate legal entity. However, under Section 10 of the LLP Act 2012, a partner remains personally liable for their own wrongful acts or omissions — for example, a partner who is personally negligent in the course of the LLP's business may be personally sued for that negligence, though the other partners are not personally liable for that partner's acts. Designated partners may also have personal liability for certain statutory defaults under Section 68 of the LLP Act 2012. This limited liability protection is the principal advantage of an LLP over a conventional partnership under the Partnership Act 1961, where all partners are jointly and severally liable for the firm's debts.
An LLP is registered with SSM by submitting an application via the MyLLP portal, including the proposed LLP name (which must end with 'LLP' or 'PLT'), the nature of business, the names and details of all partners and designated partners, the registered office address in Malaysia, and the LLP Agreement (or a statement that the LLP will be governed by Schedule 1 defaults). The registration fee is RM 500 for a new LLP under the LLP (Registration) Regulations 2012. At least two designated partners must be individuals who are at least 18 years of age and ordinarily resident in Malaysia under Section 11 of the LLP Act 2012. SSM will approve the name (subject to the name not being identical or too similar to an existing company, LLP, or business name), issue a Certificate of Registration, and enter the LLP in the register. The LLP must maintain a registered office in Malaysia and file an annual declaration with SSM under Section 68.
Yes, foreign nationals may be partners in a Malaysian LLP under the LLP Act 2012. There is no restriction on foreign nationals being partners generally. However, the LLP must at all times have at least two designated partners who are individuals ordinarily resident in Malaysia under Section 11 of the LLP Act 2012. A foreign national resident in Malaysia on a valid long-term pass (Employment Pass, Residence Pass–Talent, or MM2H pass) may qualify as ordinarily resident. For LLPs carrying on a regulated profession — such as legal practice under the Legal Profession Act 1976, or accounting under the Accountants Act 1967 — the relevant professional regulatory body's requirements regarding foreign participation must also be satisfied, as these statutes may impose restrictions on foreign partners in professional firms beyond the LLP Act 2012's general provisions.
Unlike a conventional partnership under the Partnership Act 1961, the death, retirement, or bankruptcy of a partner does not automatically dissolve a Malaysian LLP, because the LLP is a separate legal entity with perpetual succession under Section 4 of the LLP Act 2012. The LLP continues to exist, and the departing partner's interest passes or is dealt with according to the LLP Agreement. If the LLP Agreement provides for a buyout mechanism, the remaining partners or the LLP acquires the departing partner's interest at a price determined under the Agreement. If no mechanism is provided, the default rules in Schedule 1 to the LLP Act 2012 apply, which generally provide that on a partner ceasing to be a partner, that partner or their estate is entitled to receive the fair value of their interest in the LLP as at the date they ceased to be a partner. The LLP must update its register of partners and notify SSM of the change within 14 days.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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