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 General Partnership.
The key distinctions between LLP and General Partnership are set out below:
| Aspect | LLP | General Partnership |
| Capital Contribution | Partners contribution | Partners contribution |
| Business Ownership | LLP (partners have a share in capital and profits) | Partners |
| Legal Status | Separate legal entity | Not a separate legal entity |
| Party liable for debts of the business | LLP | Partners |
| Responsibility for management | Partners | Partners |
| Number of Shareholders/ Partners | Minimum 2 and no maximum limit | 2 to 20 partners (Except for partnerships for professional practice with no maximum limit) |
| Personal Liability | No personal liability of partner, except for own wrongful act or omission or without authority | Unlimited liability (jointly and severally liable with the partnership) which can extend to personal assets of the partners |
Conclusion:
LLPs and General Partnerships each offer distinct advantages depending on the nature and goals of the business. The LLP offers limited liability to its partners whereby any debts and obligations of the LLP will be borne by the assets of the LLP. In the case of a General Partnership, the partners are jointly and severally liable with the firm. Hence, the choice between the two structures should be made based on factors such as the number of partners, risk tolerance, and business objectives.
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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
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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.
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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.
