How to convert a Private Company to Limited Liability Partnership (LLP)

Recent economic setback, many companies encounter challenges to sustain continuously, many opt for conversion in order to save operating cost, beside maintaining the shield of protection and separate legal entity status.

A) Pre-conversion

1) Partnership agreement

The partnership agreement is to govern the matter and avoid the conflict among the partners, such as the contribution of capital, profit and loss sharing ratio, the rights and duties of partners, the entry and retirement of partner and remuneration. The partnership agreement is an optional, if no partnership agreement, then the Limited Liability Partnership Act 2012, Schedule 2 will apply.

2) Newspaper advertisement

The purpose of the advertisement is to inform the public who has connected business with the company such as: shareholder, vendor, customer, banker, employee, the company is making an application to convert from a Private Company to a Limited Liability Partnership within 14 days after the publication in a nation wide circulated newspaper. The compliance officer has to furnish the name of the newspaper and the date of publication in the Form 6

3) Government Gazette

The application to publish in the government official gazette for the application to convert from a Private Company to a Limited Liability Partnerships. The compliance officer has to furnish the date of publication and the official gazette number.

B) During the conversion

1) Reservation of name

The compliance officer would apply the reservation of name of Limited Liability Partnership (LLP) for the 30 days. If the compliance official fail to register within the stipulate period, the reservation name will be lapsed, and the compliance officer has to submit a fresh application for the reservation of the name. The fee for a conversion payable to Companies Commissioner Of Malaysia (CCM) is RM500.00. The application and payment via portal www.myllp.com.my.

2) Form 6 – Application for Conversion From Private Company To Limited Liability Partnership

This form is required to submit to registrar to notify the application of conversion from the Private Company to Limited Liability Partnership by the compliance officer. The condition as follows :

i) Same shareholders and all of them agree to convert by a shareholder resolution,

ii) No subsisting security interests in its assets，

iii) At the date of application, the private company is solvent,

iv) All outstanding statutory fees to government agencies has been settled,

v) Advertisement has been placed in a widely circulated newspaper, the Gazette, and

vi) All creditors agreed to the conversion.

C) Post-registration

The consequent of the conversion as follows:

i) Vesting of assets of the Private Company into LLP,

ii) The pending proceeding may be continued, completed and enforced against or by the LLP,

iii) Existing agreements and contracts shall have effect, however the permit need to reapply.

iv) The LLP continue to be liable for the liabilities and obligations incurred prior to the conversion,

v) The LLP is required to state in the invoice and correspondence letter, the previous name prior to conversion within 14 days after the conversion and for a period of 12 months, and

vi) The bank account have to apply a new account.

Conclusion

The LLP is simple and suit the Small And Medium Enterprise (SME), where the partners need not to appoint an auditor and a company secretary.