Limited Liability Partnership (LLP) is an alternative business vehicle regulated under the Limited Liability Partnerships Act 2012 which combines the characteristics of a company and a conventional partnership.
The key distinctions between LLP and Company are set out below:
| Aspect | LLP | Company |
| Capital Contribution | Partners contribution | Share capital |
| Business Ownership | LLP (partners have a share in capital and profits) | Company (shareholders own ‘shares’ that give them certain rights in relation to the Company) |
| Legal Status | Separate legal entity | Separate legal entity |
| Party liable for debts of the business | LLP | Company |
| Responsibility for management | Partners | Board of Directors |
| Number of Shareholders/Partners | Minimum 2 and no maximum limit | Minimum 1 and maximum 50 in private company |
| Personal Liability | No personal liability of partner, except for own wrongful act or omission or without authority | No personal liability of individual director or shareholder |
Conclusion:
LLPs and Companies each offer unique benefits depending on the business needs. LLPs offer simple and flexible procedures in terms of its formation, maintenance and termination. Ultimately, the choice between the two depends on considerations such as control, regulatory compliance, and long-term business objectives.
——
Author(s):
Ashley Yeo, Founder
E: ashley@yeoashley.com.my
Nicole Goh, Associate
E: nicole.goh@yeoashley.com.my
Tan Nian Tze, Pupil
E: niantze.tan@yeoashley.com.my
——
Hello! This is Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia. We provide comprehensive services tailored to growing businesses to meet your complex needs.
Our experiences include structuring of company shares for purposes of fundraising and incentivising employees, capital markets, mergers and acquisitions, regulatory compliance, and other shares-related matters, ensuring efficient and compliant processes. Our dedicated team is committed to empowering companies with the tools and guidance needed to navigate these critical areas, enabling them to focus on growth and success with confidence.
——
This article is intended to provide general information and does not constitute and/or should be relied on as any legal opinion or professional advice. For more information, you may reach out to Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia.
