A Limited Liability Partnership (LLP) is a business vehicle registered under Malaysia’s Limited Liability Partnerships Act 2012 that gives its partners the liability protection of a company while keeping the internal flexibility of a partnership. It sits between a conventional partnership and a Sdn Bhd, and most foreign founders who research it stop at “it exists” without ever finding out whether it actually fits their situation.
This guide covers what an LLP is, who is legally allowed to register one, what it costs against the Sdn Bhd path, how it is taxed under a 2026 rule change most guides have not caught up with yet, and the specific situations where it beats a private limited company rather than just sounding cheaper.
Key Takeaways
- An LLP is a separate legal entity under the Limited Liability Partnerships Act 2012, needs a minimum of two partners, and costs RM500 to register with SSM, well below a Sdn Bhd’s roughly RM1,050 in statutory fees.
- Most corporate-services sources say foreigners can own 100% of an LLP, provided a Malaysia-resident compliance officer is appointed. A minority of sources claim a local partner is required, which is a genuine inconsistency worth confirming directly with SSM before you commit.
- Starting Year of Assessment 2026, Malaysia’s Budget proposes a 2% tax on LLP profit distributions to individual partners above RM100,000 a year, a rule most existing LLP guides do not yet mention.
What Is a Limited Liability Partnership (LLP) in Malaysia?
A Limited Liability Partnership, locally known as PLT (Perkongsian Liabiliti Terhad), is a body corporate registered under the Limited Liability Partnerships Act 2012. It is a separate legal entity from its partners, meaning it can own property, sign contracts, and sue or be sued in its own name, and its existence does not end when a partner leaves or a new one joins.
The concept was introduced specifically to give small and medium businesses, joint ventures, and professional practices, such as law firms and accounting firms, an alternative to the stricter compliance regime of a Sdn Bhd. Partners in an LLP are shielded from the LLP’s debts beyond what they contributed, while still keeping the informal, agreement-based flexibility that a conventional partnership allows.
What an LLP does not give you is share capital in the way a company does. There are no shares to issue or transfer, no board of directors, and no shareholders. Instead, everything runs on the LLP Agreement between partners, which is one reason LLPs suit joint ventures where the parties want to define their own rules rather than default to the Companies Act’s rigid structure.
What Are the Requirements to Register an LLP in Malaysia?
Under the Limited Liability Partnerships Act 2012, an LLP in Malaysia needs to satisfy a fixed set of conditions before SSM will accept the application.
- Minimum two partners. There is no cap on the maximum. Partners can be individuals, bodies corporate, or a mix of both.
- A compliance officer. Every LLP must appoint at least one, either from among its own partners or a person qualified to act as a company secretary. This person must be at least 18 years old and a Malaysian citizen or permanent resident who ordinarily resides in Malaysia.
- A registered address in Malaysia. This is where SSM and other authorities send official notices, and a P.O. box does not qualify.
- An LLP name ending in “Perkongsian Liabiliti Terhad” or its abbreviation, PLT. The proposed name has to clear SSM’s naming rules and is reserved for 30 days once approved.
- An LLP Agreement. Not legally mandatory to submit at registration, but strongly advisable, since the LLP Act’s default Second Schedule provisions apply automatically to anything the partners haven’t agreed on themselves. If you don’t write your own rules, the statute writes them for you.
There is no minimum paid-up capital requirement for an LLP, unlike a Sdn Bhd’s practical (if not legal) expectations. Partners still need to make some capital contribution in cash or assets, but the amount is whatever the partners actually agree suits the business.
If the LLP is being formed for a regulated professional practice, such as law or accountancy, the application also needs an approval letter from the relevant governing body before SSM will register it.
Also read: How to Open a Corporate Bank Account in Malaysia: Requirements, Process, and Costs
Can Foreigners Own 100% of an LLP in Malaysia?
Most corporate-services sources say yes. Multiple firms that handle Malaysia incorporations for foreign clients state plainly that foreign individuals or entities can hold 100% of an LLP’s partnership interests, with the only Malaysia-residency requirement falling on the compliance officer, not on the partners themselves.
I want to flag something honestly here rather than smooth it over: at least one source in my research describes LLPs as “primarily designed for Malaysian citizens” and states that foreigners “may face restrictions” because an LLP “requires at least one Malaysian partner.” That directly contradicts the more consistent position from several other corporate-services firms, and I could not find a clause in the LLP Act 2012 itself, as summarized in SSM’s own published materials, that imposes a residency requirement on ordinary partners the way it does on the compliance officer. Given that inconsistency, if 100% foreign ownership of the LLP is a hard requirement for your plan, verify it directly with SSM or a licensed company secretary before you reserve a name, rather than relying on any single guide, including this one.
What is not in dispute: the compliance officer must be a Malaysian citizen or permanent resident ordinarily residing in Malaysia. If none of the foreign partners meet that, you will need to engage a local compliance officer, the LLP equivalent of the resident-director requirement that trips up first-time Sdn Bhd founders.
Also read: Malaysia Free Trade Zones: FIZ vs FCZ, Benefits, and How to Set Up
How Do You Register an LLP in Malaysia?
Registration runs through SSM’s MyLLP portal, and the sequence is shorter than a Sdn Bhd incorporation.
- Name search and reservation. Submit your proposed name for SSM approval. Once approved, it is reserved for 30 days.
- Prepare partner and compliance officer information. This includes identification documents for every partner, and separately for any partner acting as compliance officer, proof of Malaysian residency.
- Submit the application via MyLLP. The form covers the proposed name, nature of business, partner details, compliance officer details, and registered address.
- Pay the RM500 registration fee. This is the flat statutory fee SSM charges for LLP registration, the same for locally owned and foreign-owned LLPs alike.
- Receive your Notice of Registration. Sources vary slightly on timing, with some quoting 4 working days and others up to 15, largely depending on MyLLP portal load and whether the application needs a professional-body approval letter first. Budget for roughly a week as a realistic middle ground.
Unlike a Sdn Bhd’s MyCoID system, most LLP guides describe the process as genuinely simpler once the name is approved, with fewer supporting documents required for a standard commercial LLP than for a company limited by shares.
Learn more: How to Register a Company in Malaysia: A Complete Guide for Foreign Investors in 2026
How Much Does It Cost to Register an LLP in Malaysia?
The government side is fixed and low. SSM’s statutory LLP registration fee is RM500, roughly half of a Sdn Bhd’s combined incorporation and name-reservation fees of about RM1,050. There is no separate annual return fee comparable to a Sdn Bhd’s RM150, though LLPs still owe an RM200 annual declaration lodgement.
Where the comparison gets less straightforward is professional support. vOffice, which operates InvestinAsia’s Malaysia setup services, publishes only Sdn Bhd registration packages on its Malaysia page, not a dedicated LLP package: an Essential package at USD 2,794 covering incorporation, one year of corporate secretary and SST registration, one year of virtual office, and banking assistance; and a Complete package at USD 5,331 that adds a year of accounting and tax filing on top. Those figures are Sdn Bhd numbers, not LLP numbers, since no comparable bundled LLP package is currently listed.
What that gap tells you in practice: an LLP’s government fee is genuinely lower than a Sdn Bhd’s, but if you want professional help preparing the LLP Agreement, arranging a compliance officer, and handling the MyLLP submission, expect to negotiate that separately rather than assume a fixed LLP-equivalent bundle exists at every provider. For solo founders comfortable filing the MyLLP application themselves, the direct cost genuinely can stay close to the RM500 government fee. For anyone who wants the process handled end to end, budget for a smaller, but not necessarily proportionally smaller, service fee than the Sdn Bhd packages above.
Notes from InvestinAsia Consultants: The founders who regret choosing an LLP purely for the lower headline fee are usually the ones who didn’t budget separately for the LLP Agreement itself. A generic template rarely covers profit-sharing edge cases, partner exit mechanics, or what happens if a partner stops contributing capital. Treat the agreement as a real legal document worth paying for, not a formality to rush through to get the RM500 saved elsewhere.
Not sure if an LLP’s lower fee actually saves you money?
Our Malaysia team can break down the real first-year cost of an LLP against a Sdn Bhd for your specific setup.
How Is an LLP Taxed in Malaysia?
An LLP is taxed as a separate legal entity under the Income Tax Act 1967, not passed through to partners the way a conventional partnership is. The standard rate is 24% on chargeable income.
Resident LLPs that meet the SME conditions, capital contribution of RM2.5 million or less and gross business income of RM50 million or less, qualify for the same tiered preferential rate that applies to companies since Year of Assessment 2023: 15% on the first RM150,000 of chargeable income, 17% on the next RM450,000, and 24% above RM600,000.
One thing that genuinely matters and that most LLP guides skip: for Sdn Bhd companies, LHDN’s Public Ruling No. 8/2025 excludes any company from these preferential rates once foreign shareholding exceeds 20%, effective Year of Assessment 2024. I could not confirm from my research whether this exact 20% foreign-ownership exclusion has been applied identically to LLPs, since the sources I found describe the LLP SME conditions around capital and gross income without addressing a foreign-ownership carve-out specifically. If your LLP will be majority or wholly foreign-owned, this is worth confirming directly with LHDN or a tax adviser before you assume the tiered rate applies, rather than assuming LLPs automatically inherit every company-specific SME condition.
Profit distributed to partners is exempt from further tax at the partner level, and there is no withholding tax on those distributions, which has historically been one of the LLP’s genuine advantages over drawing a salary from a Sdn Bhd. That changes partially from Year of Assessment 2026: Malaysia’s Budget 2026 proposes a 2% tax on profit distributions from an LLP to an individual partner, resident or non-resident, once that partner’s distributions exceed RM100,000 in a year. It mirrors a parallel 2% tax proposed on dividends above RM100,000 from resident companies. If your LLP is structured to route significant profit to individual partners rather than reinvest it, this new threshold changes the math on how much of the LLP’s tax advantage over a Sdn Bhd actually survives past 2025.
Partner remuneration, such as a fixed monthly salary to a managing partner, is only tax-deductible at the LLP level if it is explicitly stated in the LLP Agreement. This is another reason the agreement is not a document worth treating as boilerplate.
Also read: Corporate Tax Rates in Asia 2026: 10-Country Comparison
LLP vs Sdn Bhd in Malaysia: Which Should You Use?
The two structures solve different problems, and picking based on cost alone tends to backfire once a business grows.
| Factor | LLP | Sdn Bhd |
|---|---|---|
| Registration fee (SSM) | RM500 | Roughly RM1,050 |
| Minimum owners | 2 partners | 1 shareholder |
| Share capital / equity | None; capital contributions only | Shares, can raise capital by issuing more |
| Audit requirement | No mandatory annual audit | Audit required for most actively trading companies |
| Access to MIDA incentives | Generally not eligible; incentives are company-specific | Eligible where sector and investment size qualify |
| Raising outside investment | Difficult; no shares to issue to investors | Standard path for equity fundraising |
| Best suited for | Professional practices, joint ventures, small partnerships not planning to raise equity | Businesses planning to raise capital, hire at scale, or bid for corporate and government contracts |
An LLP tends to make sense when two or more partners are running a professional practice or a joint venture, want limited liability without the full weight of company compliance, and have no near-term plan to raise outside equity. A Sdn Bhd makes more sense once you expect to bring in investors, need MIDA-linked incentives, or plan to sponsor an Employment Pass at a scale where lenders and immigration officers expect to see a conventional corporate structure with shares.
If your Asia strategy extends beyond a single Malaysia entity, whether you’re weighing a regional holding structure or deciding if Malaysia needs its own operating layer at all, that decision sits one level above the LLP-versus-Sdn-Bhd question. InvestinAsia’s guide to holding company vs operating company structures in Asia covers when that additional layer is worth the compliance cost.
What Are the Compliance Risks of Running an LLP in Malaysia?
An LLP’s lighter compliance load is genuinely lighter, not compliance-free. Missing the ongoing obligations carries real consequences.
Every LLP must lodge an Annual Declaration with SSM stating whether it is able to pay its debts as they fall due, along with an RM200 annual fee. Accounting records need to be kept for at least seven years, even though a formal audit is not mandatory the way it is for most Sdn Bhd companies.
On the tax side, if no compliance officer is appointed, or the one appointed doesn’t follow through, responsibility for the LLP’s tax compliance falls jointly on all partners under Section 75B of the Income Tax Act 1967. That is a meaningful exposure for partners who assumed the LLP structure itself was doing the shielding. Separately, remuneration paid to partners that isn’t documented in the LLP Agreement, as required under Section 39 of the Income Tax Act, simply isn’t deductible, which turns a paperwork gap into a real tax cost.
Registered address requirements apply the same way they do to a Sdn Bhd. If your LLP’s registered address stops being valid, whether the lease lapses or a virtual office provider closes, official notices sent there may still be treated as received, which is how businesses end up missing deadlines they never actually saw.
An LLP’s separate legal personality means the LLP itself, not individual partners, is generally liable for the business’s debts. That protection has a limit: a partner remains personally, jointly, and severally liable for their own wrongful act or omission carried out in the course of the LLP’s business, which is a narrower but real exception worth understanding before assuming the liability shield is absolute.
Ready to register your LLP or Sdn Bhd the right way?
InvestinAsia’s Malaysia team helps foreign founders pick the right structure before incorporation, not after.
References
1. Companies Commission of Malaysia (SSM). Starting a Limited Liability Partnership (LLP). Retrieved from
https://www.ssm.com.my/Pages/Register_Business_Company_LLP/LLP/Starting-a-Limited-Liability-Partnership-(LLP).aspx
2. Companies Commission of Malaysia (SSM). Limited Liability Partnership: Frequently Asked Questions Booklet. Retrieved from
https://www.ssm.com.my/Pages/Publication/Booklet/document/LLP_bkengLS_update.PDF
3. Inland Revenue Board of Malaysia (LHDN/HASiL). Tax Rate of Company. Retrieved from
https://www.hasil.gov.my/en/company/tax-rate-of-company/
4. PricewaterhouseCoopers (PwC) Malaysia. Personal Income Tax, Malaysia Tax Booklet (Budget 2026 provisions). Retrieved from
https://www.pwc.com/my/en/publications/mtb/personal-income-tax.html
5. Malaysian Institute of Accountants (MIA). Limited Liability Partnership: Membership in Public Practice. Retrieved from
6. vOffice. Malaysia Company Registration Service (Sdn. Bhd.). Retrieved from
https://voffice.co.id/en/services/company-registration-malaysia
