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Advanced Comsetup. (n.d.). Malaysia Limited Liability
Partnership Registration. Retrieved

from https://comsetup.com.my/incorporation-
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Gün, M. (2021, December 11). Rendering of Accounts in
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Rahman, A. H., Zain, M. N. R., Ghadas, A. Z. A., Mulok, T. A.,
Othman, N. S., Osman, G., Hassan, M. S., & Nadarajan,
R. (2021). An analysis on nature of limited liability
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Science, 18(1), 268-277.

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Partners are protected by limited liability partnerships since they are not individually liable for corporate debts. As seen in this instance, if the LLP dissolves before incurring commercial debts, the parties become personally accountable. Moreover, based on what has been written in the main and sub-body it is clear regarding the Limited Liability Partnership where has a few different characteristics from the general partnership and has some important Malaysian authorities. Besides, it also has been clear about how to register as a limited liability partnership, knowing the duties and responsibilities of LLP partners and understanding the liabilities of partners. It has been highlighted that the duties and responsibilities of the LLP are partners being responsible to their render true accounts, no conflict of interest and no secret profit. Besides, it also has been highlighted those liabilities of partners are the general liability of LLP, wrongful act or omission and when LLP is insolvent. In conclusion, LLP is a better option as an alternative business as it is flexible when it comes to the roles in businesses. People may choose whatever position they want to play and how much time they want to spend on it, which is fortunate for this type of business. Furthermore, LLP is a type of business that is simple to set up, as we only need to give our LLP a name and register it with the Companies Commission of Malaysia, along with all of the required documents.

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                                                                                       Registration of Limited Liability Partnership (LLP)        

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                                                                                       Registration of Limited Liability Partnership (LLP)        

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Section 10(1) of the Limited Liability Partnership Act (LLPA) (2012) states that Limited Liability Partnership (LLP) needs to be formally registered under the Companies Commission of Malaysia (SSM) and the registration will take about four to seven business days. Those who have interested to register for LLP in Malaysia, should understand the details and meet the requirements of the registration. They should receive the approval of the proposed name of LLP from the SSM before the registration. Besides, LLP can have unlimited members but it must have at least two partners. The partners can make up of either body corporate or natural individuals and a combination of both bodies corporate and natural individuals. A partner doesn't need to own Malaysia's principal or only residence. Moreover, LLP should have a minimum of one compliance officer.  The compliance officer appointed should be either the LLP’s partner or an individual who is authorized to function as a secretary under the Companies Act. To become a compliance officer, the criteria will be the person must age 18 years old or above, he or she can either be a Malaysian citizen or a permanent resident that ordinarily resides in Malaysia. Moreover, LLP must have Malaysia’s registered office’s address so that the notices and communication can be delivered to the registered address.

For the registration of a Limited Liability Partnership in Malaysia, the registrar, the Companies Commission of Malaysia (SSM) will need some information and documents such as the partnership’s proposed name, registered office’s address, nature of the proposed business, information of partners and compliance officers, and the professional body’s approval letter if the Limited Liability Partnership is incorporated for the objective of conducting any professional practice as prescribed in the First column of Third Schedules of the LLPA 2012.

For the procedure to register the LLP, the first step will be the person who wants to register needs to complete the name search application and submit it to the Companies Commission of Malaysia (SSM) for approval. Then, SSM will send an email with their decision on the suggested name. The approved name will be reserved for 30 days from the date of approval. After the approval of the proposed name, registration of RM 500 is needed to pay for the setup of LLP. The progress of registration will be notified by SSM via email. SSM will assign an LP registration number to the LLP once it has been officially incorporated.

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Relevant Authorities and Their Responsibilities towards Limited Liabilities Partnership (LLP)

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Relevant Authorities and Their Responsibilities towards Limited Liabilities Partnership (LLP)

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There are some important Malaysian authorities such as the Inland Revenue Board of Malaysia (IRB) and the Companies Commission of Malaysia (SSM) that need to be considered while incorporating, operating and dissolving the Limited Liability Partnership (LLP). The responsibilities of the Inland Revenue Board of Malaysia (IRB) towards Limited Liability Partnership (LLP) are to participate in any matters related to taxation and to act as the Malaysia government’s agent for collecting the tax payment from the LLP. Similar to a company, a Limited Liability Partnership (LLP) is considered a business entity that is taxed in Malaysia although it is a partnership. Limited Liability Partnership Act (2012) has managed to include Limited Liability Partnership in the definition of “person” by referring to the Income Tax Act (ITA) (1967). Section 2 of ITA (1967) did not state any specific definition for Limited Liability Partnership (LLP).

Besides, a Limited Liability Partnership is expected to be treated as a company based on its tax residence status, business’s basic period, its ability to carry forward any unabsorbed losses and utilized capital allowance of the business, and its duties to submit an income tax return within 7 months after the end of its accounting periods. Similar to the company, LLPs are exempt from paying taxes on dividends and profit distributions to their partners. It is taxed at the LLP level at the tax rate of 24% which is similar to the other company’s tax treatment. Therefore, IRB will be the authority for LLP to refer to when it comes to taxes but not the Companies Commission of Malaysia. IRB will be in charge of providing the guidelines and offering guidance to the one who incorporated a new LLP in Malaysia.

The Companies Commission of Malaysia (SSM) is responsible for the incorporation, operations and conversion of LLP in Malaysia. It is in charge of giving guidelines and guidance to people who have an interest in incorporating an LLP in Malaysia. The officers of the Companies Commission of Malaysia will receive all necessary documents from incorporation to dissolution of a Limited Liability Partnership from the partner. Besides, SSM also offers an online registration process for those who are interested to make registration by using this easier way. Moreover, the third party may make a complaint to the Companies Commission of Malaysia (SSM) for inquiry if LLP fails to meet its obligations and file an official report with the police.

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 Characteristics of Limited Liability Partnership (LLP)

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 Characteristics of Limited Liability Partnership (LLP)

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Limited liability partnership has different characteristics when compared with general partnership business. A limited liability partnership must require a minimum number of two designated partners. There is no limit to the maximum number of partners in a limited liability partnership. The existence, liabilities and rights of a limited liability partnership will not be affected by any changes in its partners. A designated partner in a limited liability partnership acts as a partner which is like a director in a private limited company. The designated partners are appointed to any tasks such as incorporation documents following the agreement of a limited liability partnership. In other words, if the limited liability partnership is penalized for any violation, then the designated partners are liable for the penalties and the provisions.

Besides, a limited liability partnership is a separate legal entity from its partner or member, and this is the main difference to distinguishes it from other types of businesses. Generally, the assets in the partnership are liable to the total proportion, but the partners’ liability in the limited liability partnership is contributed by following their agreement. Even though this special feature was acquired by a limited liability partnership, there were still no cases related to limited liability partnerships in Malaysia exist. In other words, if a dispute occurs in a limited liability partnership and it is sued for negligence or other violation in accordance with Malaysian Companies Act, the partners will be exempt from the liabilities and the limited liability partnership will be charged for the liabilities independently.

In addition, a limited liability partnership has a particular characteristic which is perpetual succession. A perpetual succession refers to a continuous operation of a business despite the death of owners, bankruptcy, insanity, or any modification in the membership status. The limited liability partnership with perpetual succession features can continues its operation even if there may occur unexpected misfortune, unless it announces for the termination officially. In 1967, a case in Re Noel Tedman Holdings Pty.Ltd illustrated has illustrated the special rights of perpetual succession with the existence of the company. The directors and shareholders of the company were both dead, but the shares of the company can be transferred to their child. A personal representative of the company that appointed by the deceased also been allowed to elect as new director in the company.

Moreover, a limited liability partnership is possessed to an unlimited capacity as its special feature to distinguish it from a general partnership business. The characteristic of unlimited capacity indicates that there are not any restrictions or exemptions towards third parties. A limited liability partnership aims to acquire a flexible and complete internal structure by having unlimited capacity. In other words, the resolution makes by the board of directors in general meetings do not strict by any specific requirements. A limited liability partnership acts as a separate legal entity that has unlimited capacity is acknowledged by Limited Liability Partnerships Act (LLPA) 2012. Under Section 3(4) of LLPA 2012, a limited liability partnership with unlimited capacity is adequate to sue or be sued. It is also capable to acquire, develop or dispose of its owned property.

Furthermore, the members of a limited liability partnership are restricted to the capital contribution toward the corporation. As refer to the limited liability offers to the members, any debts and obligations of the limited liability partnership exist will be liable by its assets. For example, if the limited liability partnership faces a liquidation situation, the debts from liquidation shall be settled by the members and their liabilities will be restricted after that. The said capital contribution can be in various forms such as money, check, tangible, or intangible plant, movable or immovable property and others. Therefore, the members of a limited liability partnership shall decide the capital contribution amount for the creation of a limited liability partnership as they have no legal requirement to provide a specific amount of capital contribution. With the freedom of capital contribution authorized by the law towards the members, they are also allowed to claim back their capital contribution at any time.

Lastly, the taxation of a limited liability partnership is similar to a general partnership. Even though a limited liability partnership is a separate legal entity from its members, its profits and the liability of tax have also been charged to the partners. It also means that the members in a limited liability partnership will be taxed as partners, and they are liable for the share of revenue generated by the corporation in the taxation system. However, the obligation to pay tax on a share of profit from the limited liability partnership is not liable to the partners. In other words, the partners have only been charged personally on the payment other than the share of profit in income tax. Those other payments are included perquisites, remunerations and benefits-in-kind that are generated by the limited liability partnership.

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Duties and Liabilities of Partners in Limited Liability Partnership (LLP)	

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Duties and Liabilities of Partners in Limited Liability Partnership (LLP)	

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i. Duties of Partners in Limited Liability Partnership (LLP)
All partner's responsibilities stem from the second principle, which states that a partner's relationship with another must be based on the highest indicators of quality trust. A partner's responsibilities are like those of an agency in many ways.

The first duty of partners is that it is their responsibility to render true accounts. According to rule 9 of Sch 2 of the Limited Liability Partnerships Act (LLPA) in 2012, it is stated that “each partner shall render true accounts and full information of all things affecting the limited liability partnership to any other partner or that other partner's legal representatives”. The term "rendering of account" relates to an individual demonstrating and proving to another individual, through actual information, that he is performing his company operations in conformity with the regulations that are applied (Gün, 2021). To put it another way, account rendering is done following a set of rules. Partnerships are obligated to disclose as well as offer sufficient details to every partner or his legal representatives about matters affecting the firm. This indicates that a partner should not keep information about the company from other partners, otherwise they must keep accurate records. They must be transparent to each other, and every partner gets privy to the business's financial records.

Next, partners are required to act with integrity which concluded about no secret profit. According to rule 11 of Sch 2 of LLPA 2012, it is stated that “every partner must account to the limited liability partnership for any benefit derived by that Partner without the consent of the limited liability partnership from any transaction concerning the limited liability partnership, or from any use by that partner of the property, name or any business connection of the limited liability partnership”. The act states that it has been the responsibility of partners to behave in the firm's best interests. This is an essential requirement, and no partner can contract himself out, even with the permission of the other partners. As a result, the partner should try to ensure the company's optimum earnings. A partner must not benefit personally at the company's cost. A hidden income is revenue generated by a partner who utilizes his or her company's properties and facilities to conduct unlicensed operations on his or her behalf. A typical case is a bar owner who buys drinks from a shop on his own and distributes it at the bar in rivalry with or instead of his employer's beverages. The profit generated as a result is a secret profit.

Other duties of partners are also incumbent upon you to be diligent. A partner is required to conscientiously attend to his responsibilities. According to Section 90(3), “No partner, officer or employee of the limited liability partnership shall be liable to be sued in any court nor be subject to any tribunal process, including disciplinary action for any report submitted by him under subsection (1) provided that the report is made in good faith”. Every contract includes an underlying responsibility of good faith and equitable conduct generally, in partnerships also. This obligation states that neither party will do anything to jeopardize or harm the other party's right to receive the contract's advantages. Judges review the evidence and assess what is reasonable in the situation when determining whether the responsibility of good faith and fair dealing was fulfilled.

The act also prepares the section when the partners are required to indemnify for loss of the business activities. Rule 3 of Sch 2 of LLPA in 2012 provides that “The limited liability partnership must indemnify each partner in respect of payments made and personal liabilities incurred by that partner”. Whenever a loss is caused to the company's business because of the partner's actions, he must compensate his co-partners for the loss. This duty is put on every partnership to protect the other partners from losses incurred by a partner's deception in executing the firm's operations. It is a stipulation that must be followed to the letter. It would not be bound by the provisions of the partnership agreement. A partnership agreement provision to exclude a specific partner from accountability to the company for losses generated by his deception is void and invalid. For instance, in the banking business, X, Y, and Z formed a partnership. X committed a scam for a total of RM30,000 against one of the clients. As a result, Y and Z, as well as the other co-partners, were held accountable. In this case, X is obligated to compensate the firm for any losses incurred because of his deception. When a partner conducts the partnership's business carelessly but not fraudulently, and the company experiences loss as a result of such carelessness, the damage should indeed be carried by the individual particular partner.

ii. Liabilities of Partners in Limited Liability Partnership (LLP)
As a body corporate, LLP has limited liability where the partners are not liable for the LLP’s debts and obligations. This distinguishes it from a general partnership, in which the members are jointly liable for business commitments. The Limited Liability Partnership (LLP) Act of 2012, Section 3 of Sch 2, clearly states that an LLP is a separate legal entity. According to Section 21(2) of the LLP Act 2012, the LLP's debts will be imposed only on the LLP, not the members. To exemplify the preceding statement, creditors cannot sue any partners of an LLP for breach of contract. The impact of independent legal entities and the law of privity is that only the parties who are involved in the agreement can take legal action, either to sue or to be sued. Creditors are likewise unable to seek repayment from members for debts incurred by the LLP. If the organization is unable to pay its debts, personal assets will be protected.

Nevertheless, if any partner engages in unethical behaviour or fails to follow the LLP's business plan, both the partner who engaged in the unethical behaviour and the LLP are accountable. According to Section 21(3) of the LLP Act 2012, this provision has provided that “LLP will not affect the personal liability of a partner in tort for his wrongful act or omission, but a partner shall not be personally liable of any other partner of LLP.”  On the other hand, as a result of the claim, a provision under Section 21(4) of the LLP Act 2012 will protect the interests of the innocent partner. Other partners who do not participate in such behaviour are not held accountable. As a body corporate, LLP is required to have an adequate and effective corporate governance structure when running its operations (Rahman et al., 2021). LLP Act 2012 does not have a specific provision for LLP to apply for governance. However, practising good corporate governance for LLP is vital to ensure that partners and creditors are treated fairly.

In the context of insolvency, the LLP Act of 2012 mentions the protection of third-party creditors. Sections 22(1)(a) and (1)(b) of the LLP Act 2012 state that any partner who has received a profit distribution from the LLP when the LLP is insolvent and knows the LLP is insolvent is obligated to refund the money or value received from the LLP within two years before the start of the winding-up process. Similarly, if the partner who received the distribution is aware that the LLP will become insolvent as a result of the distribution, he or she will be held accountable.

LLP is not affected by the bankruptcy or death of a partner because it is perpetual secession and consistent with the concept of a separate legal entity. Despite that, an LLP can be wound up either voluntarily by its partners or involuntarily through legal procedures. In the context of voluntary winding up, Section 50 of the LLP Act 2012 lays out the method for an LLP to wind up. "The LLP can apply to the Registrar of LLP for wound up if the LLP has ceased to operate and has discharged all of its debts and liabilities," states Section 50(2). This is the most usual manner for a company to shut down, and the company will no longer be relevant in ongoing operations. Compulsory winding up, on the other hand, is initiated by creditors who file a winding-up petition with the court to collect outstanding debts from a business that has yet to be paid. This circumstance may place the organization under a great deal of stress, necessitating a rapid response. The firm was forced to close as a result of this, and the organization's activities should be investigated.

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Limited Liability Partnership has been enacted by the Parliament of India on 12 December 2008 and commenced on 31 March 2009. In Malaysia, the LLP Act was enforced on 26 December 2012 and before the introduction of this Act, entrepreneurs who wanted to start a business in Malaysia had the option of forming a body corporate, a partnership, or a sole proprietorship. Limited Liability Partnership Act 2012 has been introduced by Lee Al Hsian as a new business activity where the Act has examined the formation of a limited liability partnership which is a legal entity in which the partners are bound by a limited liability agreement. The Limited Liability Partnership (LLP) is an unconventional organizational form. It offers the benefit of limited liability but it also allows its member to organize their internal structure as a mutually agreed upon partnership. Entrepreneurs, professionals, and businesses that provide any form of service or work in scientific or technological areas can use the LLP structure to build commercially effective vehicles that fulfill their goals. The LLP also has been introduced as a type of alternative business vehicle in the United States of America, United Kingdom, Singapore, India, and Japan.

A limited Liability Partnership is a partnership where that partnership is accountable for debts and obligations as an organization but the partners are not personally liable. Besides, it also can be referred to as a type of corporate structure in which each partner’s liability is limited by law and LLP is a new type of legal business entity that combines the features of a private company and a traditional partnership with restricted liability. The concept of LLP is that if the partnership fails, the creditors cannot claim a partner's assets or income. LLP enables a partnership structure in which each partner’s responsibilities are limited to the amount invested in the business whereby having a partnership entail distributing risk, using individual abilities and knowledge, and creating a division of labour.

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1. Anis Syuhada binti Misli (69103)
2. Britney Ngu Yan Ling (69254)
3. Hii Wee Yin (69854)
4. Jaizatul Azwa binti Jamel (69935)
5. Nurnazura binti Mohammad Azlan (71129)