In this article, we will go over the procedures and costs involved in closing an LLP in Malaysia and focus on the strategy involved in doing so.
Business owners in Malaysia may decide to dissolve their Limited Liability Partnership (LLP) due to subpar financial results or dormancy. It is vital that they know how to do so if the owners of a Malaysian LLP decide to shut down the company. In order to Close an LLP Company in Malaysia, you must submit declarations, indemnity bonds, and affidavits from each partner. Your LLP can be closed in 3 easy steps with our assistance at Vakilsearch:
- Step1: Complete the form, and we’ll respond to all of your questions on terminating an LLP business
- Step2: Professionals from Vakilsearch assist you in completing the overall end-to-end process
- Step3: Within the specified time frames, a courier will deliver the requested documents to you.
We will outline the procedures and expenses necessary to formally close an LLP in Malaysia in this article. In Malaysia, there are three ways to wind up or dissolve an LLP: by striking off by the Registrar, voluntary winding-up by the partners, or court-ordered compulsory winding-up.
The most frequent procedure is voluntary winding-up, which is started by one of the LLP’s partners after the company has ceased operations and paid off all of its debts and liabilities. We will thus concentrate on this approach by walking you through the steps and expenses needed to close an LLP company in Malaysia.
What is a Limited Liability Partnership
Combining a partnership and a limited liability company, a limited liability partnership (LLP) exists. To further clarify;
- The protection of limited responsibility to its partners, comparable to the limited liability enjoyed by a company’s shareholders, is a feature of an LLP, together with the flexibility of internal business regulation through a partnership arrangement, similar to a traditional partnership
- The LLP’s assets, not those of its partners, will be used to pay off any debts and liabilities
- An LLP has the same legal standing as a body corporate, which allows it to sue and be sued in its name, own assets, and engage in other legitimate acts and occurrences under its name
- Additionally, LLP provides flexibility in terms of its creation, upkeep, and termination while also possessing the requisite attractiveness and dynamism to be able to compete on a national and international scale.
According to Malaysia’s LLPAct 2012, a Limited Liability Partnership may have as little as two partners and as many as an unlimited number of partners. Unlike a traditional partnership where only individuals have been allowed to become partners, an LLP allows both persons and businesses to be partners.
In an LLP, the partners are not personally liable for anything other than their own improper actions or omissions. In an LLP, each partner is jointly and severally liable for only the portion of the LLP that they contributed to.
The registration fee for an LLP is RM 500, which is slightly more expensive than that of a traditional partnership but also includes partnerships with businesses.
How To Terminate An LLP In Malaysia
The major steps involved in winding up an LLP in Malaysia using the voluntary winding-up procedure are highlighted in the outline that follows below:
- The LLP must get EPF, Perkeso, or LHDN to confirm closure
- It needs to get a formal notice from the Inland Revenue Board and provide the final urn to LHD (IRB)
- Notice of the winding-up of the LLP must be provided to all partners after receiving IRB approval
- To declare such winding-up, a notice must be published in widely read Malaysian media
- If no objections are raised, SSM will pronounce the LLP to be dissolved. If there is a disagreement, it will be resolved when the partners or creditors retract their disagreement or SSM determines the disagreement was unjustified.
Court-Ordered Receivership and Winding-Up
In this case, the principles of receivership and voluntary winding up of company limited by shares apply, with any appropriate adjustments and adaptations for an LLP.
Striking-off
An LLP may be restruck off the register by the court registrar if the registrar has reason to think that:
- The LLP is not operating or conducting business;
- violated the law, were detrimental to the national interest
- No acting liquidator for a winding-up mandated by a court; or
- The LLP has been entirely wound up, and the assets that are available are insufficient to cover the costs of requesting a court judgment to dissolve the LLP.
Usually, the registrar notifies the limited liability partnership (LLP) or one of its partners of his decision to strike off the LLP. After receiving a response from the LLP or its partners or the arguments put out as to why the LLP should not be struck off by the registrar, the registrar will then decide with knowledge.
The Cost Of Cosing An LLP In Malaysia
In Malaysia, closing an LLP involves expenses of around RM4,500. Government fees and newspaper ad fees are included here.
Keep your options open for potential restructuring plans to salvage your business before learning how to close an LLP company in Malaysia. As a final resort, think about closing your firm. If so, you should strongly consider getting expert guidance to make sure you close your LLP company in Malaysia effectively. In order to make the process of shutting an LLP easier, Vakilsearch offers a wide variety of services and advice.
Conclusion
A limited liability company, or LLP, offers the restricted responsibility and flexibility of a partnership firm. It is a relatively new and alternative corporate business form. No matter how the partners or shareholders change, the LLP remains a distinct legal entity. LLP has the authority to possess property, enter into contracts, and file lawsuits against individuals and businesses. A limited liability partnership (LLP) has two options for closing down its operations: voluntary closure or involuntary closure. In either case, closing down entails selling corporate assets to pay off debts and distributing any remaining funds among the owners of the business.
Every month, Vakilsearch carries out legal work for more than 1000 businesses and LLPs by utilising our technical skills and the knowledge of our legal specialists. Experience comfort and ease by boarding.
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