Partnership registration in Malaysia

Partnership in Malaysia

One of the options through which you can start your business is by registering with Partnership in Malaysia. The choice you make while starting a business is important. Entrepreneurs and low-cost startups are drawn from partnership businesses in a developing economy because of the ease of establishment and low operational prices. The partnership business is the type that is operated by two or more people, with a maximum limit of 20 individuals. Also, the owners divide the management, profits, and liability evenly. If you are planning to register for a partnership in Malaysia, then the owner of the partnership should be a Malaysian national or permanent resident.

This type of business is suitable for those with 2 or more business partners who can test their business model or explore a whole new market.

Documents needed for the Partnership registration in Malaysia

You should have particular documents and fee payments prepared before you start your Partnership registration in Malaysia, which are as follows

• Identity card, permit, approval, and License to conduct business clear copies of the owners
• The proposed name of the business
• Document with details of your business activities
• Relevant permits
• Business registration fee – RM 100
• Business information docket- RM 10
• Registration of the Branch office – RM 5

Steps for Partnership Registration in Malaysia

The steps that you have to follow for the Partnership registration in Malaysia are as follows

Step 1- Business Name Registration

To register your business name, you must fill out the form PNA form.42

You must list three names for the SSM to choose from, in order of priority. After you gain approval, you must submit the form.

Step 2- Register your business

For the partnership registration in Malaysia now, you must complete the business registration form, which is Form A. That will need particular details, which are as follows

• The business name is attached to the certified Form PNA.42
• The commencement date of business
• The main location of your business office
• The address of your branch offices
• Owners Information
• Partnership agreement copy
• A document with details of the proposed business activity
• After the form is completed, all the owners must sign it and submit it online or in person.

Step 3- Receive a certificate

For the partnership registration in Malaysia, after the payment is made and all the documents are examined, you may receive your certificate in an hour. This certificate is valid for one year and can be extended for five years.

Step 4- Grow your business

Now that your partnership is officially registered, then it's time for you to grow your business. There are some ways for your business to grow, which are:

Identify and provide to your market

To identify your target market, you will be able to research their behaviours so that you can offer them a product that is truly catered to them, which will make your product extra popular.

Good customer service and care

When you practice good buyer service with new and existing customers, you will create loyalty. When your business receives good reviews, you will attract more customers.

Advertise well

When you advertise well, I will not mean you have to spend much money. Instead, advertising can be low-cost also if you are active on social media. When you maintain a good social media presence, you will be able to interact with potential customers, leading them to your business.

Profit goals

When you have a new partnership, you should have an important profit goal. Your goal should not be very high; it should be simple and realistic and work.

Employees encouragement

After building their team of employees, the owners must ensure that their employees are doing their best. A good business has to be sustained by its employees; for that, you have to encourage them to work hard, which will also ensure the longevity of your business.

Eligibility for Partnership Registration in Malaysia

For the Partnership registration in Malaysia, there is the list of eligibilities which are as follows

• You should be a permanent citizen or resident of Malaysia
• You have to attain the age of 18 years or above
• You can not have more than 20 owners in a partnership
• Your partnership can be made with or without the written agreement
• The person who is willing to be a partner must be of sound mind
• Foreign nationals should be eligible after they obtain an enduring residence permit
• Your business can not be similar to the owner’s name on their identity card
• Your registration should be done within 30 days of starting your business

Benefits of Partnership Registration in Malaysia

There are some advantages when you do Partnership registration in Malaysia, which are as follows

Minimum requirements

If you prefer to register a partnership in Malaysia, you will notice that it is a simple process. Only permanent residents of Malaysia are required to provide authentic local residential address proof. Partnership registration in Malaysia is less than in other corporate structures.

Low Compliance

When you compare Partnerships to various other business structures in Malaysia, you will see that partnerships follow the compliance measure, which is the lowest to function as a Partnership. The requirement for audit and annual return filings does not exist in the case of a Partnership. In a Partnership, you are not liable to pay corporate tax as the Partnership is not measured as a legal entity in Malaysia. Therefore, the partners are charged income tax on their income.

Distributing Responsibility

After you register as a Partnership in Malaysia, each partner will be held accountable for running the business. This will allow partners to fully utilize their expertise and knowledge to ensure smooth functioning and generate profits.

Partnership wind-up

You can initiate the process of winding up the partnership in Malaysia by simply representing the regional office of the Suruhanjaya Syarikat Malaysia.

Penalty for not doing Partnership registration in Malaysia

If you don't do Partnership registration in Malaysia before starting your business, then you can face legal action against you. It can be either a fine of RM 50,000 or a prison sentence of two years.

Types Of Partnerships in Malaysia

If you want to do Partnership registration in Malaysia, then you should know that there are two types of partnership in Malaysia, which are as follows

Conventional Partnership

The Partnership Act 1961 governs the conventional partnership. Two or more owners, with a cap of twenty owners, are encompassed in the partnership and pool resources for profit through shared business efforts.

The partnership is exclusively open to Malaysian citizens and permanent residents who fit into the professional practices of auditors and lawyers. The Partnership itself is not taxed, while profit and liabilities are divided among partners. The partners are individually taxed and should report gains and losses. The partners face unlimited liability.

Limited Liability Partnership

The Limited Liability Partnership is governed by the Limited Liability Partnership Act 2012, which two or more persons or corporations can establish. A limited liability partnership is not like a regular partnership; it is a separate legal entity that can initiate legal actions, manage property ownership, and respond to lawsuits.

Partnership Agreement

The formal contract that binds partners legally is the partnership agreement. In this agreement, the partner will have to delegate their respective rights, duties, and the division of profit and loss. In addition, it will establish the fundamental guidelines that will govern the partnership, which encompass aspects such as capital contributions, financial reporting, and withdrawals. Although the Partnership Act 1961 did not make partnership agreements compulsory, having a written agreement is much better for formally laying down operational strategies. It also promotes business efficacy and alleviates potential disputes and confusion between partners.

Partnership agreements in Malaysia commonly include the partner's assumption, profit and loss sharing, ownership of assets and capital accounts, practice management, expulsion, dispute matters, and disability.

Termination Of Partnership in Malaysia

Every country has its own set of rules when it comes to Partnership laws, and Malaysia is no exception. The Partnership in Malaysia can be dissolved for the reasons which are mentioned below

• End of Business
• Bankruptcy
• Owner Death
• According to Court order

Rights and Liabilities of Partnership in Malaysia

Section 26 of the Partnership Act 1961 outlines the partners' obligation. Partners should adhere to the obligations unless a specific exception is given in the partnership agreement. The obligations are as follows

• Equal sharing of the losses, capital, and profits regardless of the contributions.
• The partnership should reimburse the partners for expenses and liabilities incurred in standard business operations or property preservation.
• Whoever exceeds their agreed capital has to pay 8% annual interest.
• Partners don't receive interest on the contributed capital until the profit is determined.
• If the daily management is not designated to the manager, then the partners themselves can manage the business.
• Partnerships won't be compensated if they participate in the business operations.
• The existing partners have to give unanimous consent to the new partners.
• The major changes necessitate unanimous agreement, and the majority decides ordinary business matters.

Partnership conversion to any other business in Malaysia

The Partnership in Malaysia can be easily converted into any other form of business. Limited Liability Partnership is the best and most preferred choice for converting a Partnership into any other business form. Some of the criteria for conversion of the Partnership into a Limited Liability Partnership are as follows

• There should be approval from the concerned government authorities before the conversion
• The Partners have to be the same after the conversion
• Before conversion, the partnership must be Financially solvent
• After the conversion, the partnership in Malaysia is Considered to be dissolved, and the new entity is the Limited Liability Partnership.

Type Of Business Entities in Malaysia

There are seven types of business entities for individuals who want to start their own businesses in Malaysia. Before starting your business, you must register a business entity with the Companies Commission of Malaysia (SSM). The types of business entities are as follows

Sole Proprietorship

The sole proprietorship is usually the easiest type of business entity to register. You can register for this type of entity if you are a Malaysian or a Malaysian permanent resident. In this, there is only one owner, and their liability is unlimited.

Partnership

In a Partnership, you will have two or a maximum of 20 owners. The legal structure of the partnership is the same as that of a sole proprietorship. If you register a Partnership in Malaysia, then there will be no statutory requirements. The partners will have unlimited liability, and their assets are not protected in the partnership.

Private Limited Company (Sdn Bhd)

This is the most common option among investors. A private limited liability company is a separate legal entity, and in this, the shareholders will not be liable for the business debts and liability; therefore, the personal assets of the shareholders will be protected. Also, there is no minimum number of shareholders, but the maximum number of shareholders allowed is 50.

Public Limited Company

A public limited company listed on the Malaysia Securities Exchange is regulated by the Securities Commission. There are many additional compliance requirements. Registering with SSM is a compulsory requirement when your organization has more than 20 shareholders.

Unlimited Company

As the shareholders have unlimited liability, therefore, the least common option between business owners.

Foreign Company

Foreign companies have the option to choose between setting up their business either as a representative office or as a branch office in Malaysia.

Limited Liability Partnership

The hybrid version of the Partnership is the Limited Liability Partnership and the Limited Liability Company. This is the most common between small businesses or professional services like lawyers and auditors. This structure helps you protect your wealth if the Limited Liability Partnership is issued or if it is in Liability.

What Services Enterslice can provide?

We at Enterslice offer you complete solutions for Partnership registration in Malaysia while ensuring a seamless and legally compliant process for aspiring entrepreneurs and businesses. Our experts have a deep understanding of the Malaysian corporate laws and regulations. At Enterslice, we simplify the complex process of partnership formation. From doing initial documentation to governing compliance, our team will provide you with personalized guidance at every step. Experience the ease of Partnership registration in Malaysia with Enterslice today and start your journey towards success in Malaysia.