ARC News • August 03, 2018
The limited liability partnership (“LLP”) model is slowly gaining popularity in Malaysia due to the flexibility offered in terms of incorporation, maintenance and termination of business. Despite the easy maintenance of a LLP, it is recommended to dissolve the LLP if the LLP is no longer in operation. One of the modes of dissolving a LLP is through voluntary winding-up. As such, this article focused on the requirements and procedures for voluntary winding-up of a LLP.
Pursuant to Section 50(2) of the Limited Liability Partnerships Act 2012 (“LLPA 2012”), a LLP may submit an application for a declaration of dissolution of the LLP to the Registrar if the LLP has ceased to operate and has discharged all its debts and liabilities. Prior to the submission of the application, the compliance officer shall ensure that the following requirements have been complied with:
(a) A notice has been sent to the partners of the LLP that an application for declaration of dissolution will be made to the Registrar (“Notice to Partners”). It is mandatory for the notice to be delivered by registered post to the last known address of the partners;
(b) A letter from Inland Revenue Board of Malaysia that it has no objection to the dissolution of the LLP;
(c) A notice published in at least 1 widely circulated Malaysian newspaper in Malay language and 1 widely circulated newspaper in English language indicating that an application for the dissolution of the LLP will be submitted to the Registrar (“Advertisement”); and
(d) A statutory declaration executed by a partner of the LLP for the purpose of submission of the application.
The application for dissolution must be submitted to the Registrar within 7 days from the date of the Notice to the Partners or date of the Advertisement, whichever is the later. In the event the compliance officer is unable to submit the application for dissolution within the stipulated timeline, the compliance officer may apply for an extension of time, which in any event, shall not exceed 30 days from the expiry of the 7 days period.
Thereafter, partners and creditors are given 30 days to object the application for dissolution. Should the Registrar received any objection within the stipulated timeline, the compliance officer is required to resolve the objection within 60 days from the date of objection. In the event no evidence is given to the Registrar that the objection has been resolved, the Registrar shall have the discretion to reject the application for dissolution.
On the other hand, in the event the Registrar receives no objection to the application for dissolution, the Registrar may make a declaration of dissolution subject to the partners’ entitlement pursuant to the LLP agreement. Once the surplus asset has been distributed, the compliance officer is required to notify the Registrar within 14 days from the date of which the distribution has been completed. The declaration of dissolution is considered effective upon submission of the notification to the Registrar.
In any event, it is strongly recommended for partners of a LLP to proceed with the dissolution of the LLP in the event the LLP is no longer in operation. Professional advice need to be sought to ensure the application for dissolution is submitted correctly and professionally.
Yeo Shu Pin is a Partner at Messrs. Afif Rahman & Chong
Disclaimer: Every attempt to ensure the accuracy and reliability of the information provided in this publication has been made. This publication does not constitute legal advice and is not intended to be used as a substitute for specific legal advice or opinions. Please contact the authors for a specific technical or legal advice on the information provided and related topics.