Converting to Limited Liability Partnership (LLP)

    I Converted to LLP Because of the Many Benefits Compared to Enterprise and Sdn Bhd

    How to Convert to a Limited Liability Partnership (LLP)?

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    In this article, I will share with you how you can make a conversion from the structures in the list below to a Limited Liability Partnership (LLP) and the benefits of this conversion process.

    • Conventional Partnership
    • Private Company (Sdn Bhd)
    • From a conventional professional firm to an LLP for Professional Practice

    What are the Benefits of Converting to an LLP?

    Existing conventional partnerships or private companies (Sdn Bhd) can undergo conversion to Limited Liability Partnerships to enjoy several key benefits such as:

    • Limited liability protection for partners, similar to the limited liability benefits enjoyed by shareholders of a company.  
       
    • Reduced statutory compliance requirements and lower compliance costs. You no longer need to worry about the requirements for audited accounts and qualified Company Secretaries.
    • LLPs have perpetual legal existence.
       

    There are several important things you need to do to convert an existing conventional partnership or private company (Sdn Bhd) to a Limited Liability Partnership. Here are the important steps:

    1. You need to establish a new Limited Liability Partnership (LLP) and pay the LLP conversion fee of RM500.
    2. All assets and liabilities of the partnership/company need to be transferred to the newly registered LLP.
    3. The partnership/company needs to be legally dissolved through the orderly process of submission to the Companies Commission of Malaysia (SSM).
    4. Your new LLP is ready to start operations.

    What are the Criteria for Converting to an LLP?

    Here are the criteria that your business needs to meet to facilitate the conversion process to an LLP:

    Conventional Partnership to LLP

    • The same partners remain after the conversion.
    • The conventional partnership is currently solvent.
    • For conversions involving professional practices, an approval letter is required from the governing body.
    • All creditors agree to the conversion.

    Private Limited Company to LLP

    • The same shareholders remain after the conversion.
    • There are no security interests existing in its assets.
    • The private company is solvent.
    • All outstanding statutory fees to government agencies have been settled.
    • The private company has placed an advertisement in at least one widely circulated newspaper in Malaysia and published a notice in the Gazette of its intention to convert to a limited liability partnership.  
       
    • All creditors agree to the conversion.

    What Information is Required in the Conversion Process to an LLP?

    Here is the information and matters that you need to prepare to facilitate the conversion process to an LLP:

    Conventional Partnership to LLP

    • Name and registration number of the conventional partnership.
    • Date on which the conventional partnership was registered.
    • Partners consist of the same persons.
    • On the date of the application, the conventional partnership can pay its debts when the debts become due in the ordinary course of business.
    • Proposed LLP name.
    • General type of business of the proposed LLP.
    • Registered office of the proposed LLP.
    • Names and details of each person who will be a partner of the LLP.
    • Names and details of the compliance officers of the LLP.

    Private Limited Company to LLP

    • Name and registration number of the private limited company.
    • Date the private limited company was incorporated.
    • On the date of the application:
      • The company can pay its debts when the debts become due in the ordinary course of business.
      • All outstanding statutory fees or any amounts owed to any government agency have been cleared.
      • The company has published an advertisement in at least one newspaper widely circulated in Malaysia and published a notice in the Gazette of its intention to convert to an LLP.
      • All its creditors have agreed to the application to convert to an LLP.
    • All shareholders and creditors agree to the conversion.
    • Proposed LLP name.
    • General type of business of the proposed LLP.
    • Registered office of the proposed LLP.
    • Names and details of each person who will be a partner of the LLP.
    • Names and details of the compliance officers of the LLP.

    Conventional professional firm to LLP for Professional Practice

    • Name and registration number (if any) of the conventional professional firm.
    • Date on which the conventional professional firm was registered.
    • That on the date of the application, the conventional professional firm can pay its debts when the debts become due in the ordinary course of business.
    • Letter of approval or letter of no objection from the regulatory body.
    • Proposed LLP name.
    • General type of business of the proposed LLP.
    • Registered office of the proposed LLP.
    • Names and details of each person who will be a partner of the LLP.
    • Names and details of the compliance officers of the LLP.

    What Happens After Converting to an LLP?

    For those of you who want to make a conversion, you must understand that converting to an LLP means the transfer of property, interests, rights, privileges, liabilities, obligations and undertakings of the previous conventional partnership/private company to the new LLP.

    After the conversion, the conventional partnership or private company is considered dissolved. Here is a further explanation of what will happen:
    • Assets: All assets previously held by the conventional partnership/Sdn Bhd will be transferred to the LLP.
    • Pending Proceedings: All pending proceedings may still be continued, settled and enforced against or by the LLP.
    • Existing Agreements/Contracts: Existing agreements/contracts and so on, including employment contracts, remain in force as if the LLP were the party concerned.
    • Liabilities & Obligations: The partners in the conventional partnership or Sdn Bhd continue to be liable (jointly or severally with the LLP) for liabilities and obligations incurred before the conversion.
    • Permits or Licenses: LLPs that undergo the conversion process need to reapply for approvals, permits or licenses issued under written law to the conventional partnership or private company that are in force immediately before the date of registration of the LLP.

    Time and Money Saving Tips Regarding LLPs

    At MudahPLT, I want to help and guide entrepreneurs in Malaysia who want to venture into business through the Limited Liability Partnership (LLP) structure, whether small or large. Here are other articles you can read to make your business more successful:

    I have also compiled several Ebooks that you can use as a guide to manage your LLP more effectively. All the steps and guidance provided are based on my experience and that of my business associates. The following Ebooks are available on this platform:

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