Limited Liability Partnership Act 2012 And Legal Liability Of The Partners

  • Whilst LLP is a familiar feature in the UK, it was in December 2003 that SSM issued its initial Consultative Document (CD) proposing the introduction of the LLP as an alternative form of business vehicle for small businesses, start-ups and venture capital undertakings in Malaysia.


  • SSM defines LLP as an alternative business vehicle regulated under the Limited Liability Partnerships Act 2012 which combines the characteristics of a company and a conventional partnership.


  • Professionals such as Lawyers and Chartered Accountants are also allowed to form the LLP in order to run their professional practices, provided they are practicing the same profession. – S.8 LPP Act 2012. (For example, a Lawyer and a Chartered Accountant cannot form and be partners in an LLP since they are not from the same profession).



  • Generally, the partners in an LLP cannot be sued as they have limited liabilities in addition to it having separate legal identity. – S.3(1) LPP Act 2012


  • However, this only extends to the debts of the business and not for own wrongful acts or omission by the partners such as negligence or misconducts. – S.21(3) LPP Act 2012


  • The rationale for this is one partner cannot be made liable for the negligence or misconduct of another.


  • The LLP may in its own capacity sue its individual partners, for breach of the partnership agreement, or other conducts or omission that has in a way affected the partnership business.


  • A third party may sue another partner if he is affected by the latter’s misconduct that was not made under the authority conferred to him under the partnership agreement. – S.21(4) LPP Act 2012


  • However, where the partner has acted under the authority given to him by the partnership, then the affected partner is likely to sue the partnership and not the partner.