Mad Food Sdn Bhd (MF) has 50 members and has a market capitalization of RM5 million. The board of directors is desirous of converting MF into a limited liability partnership (LLP). The reasons are that MF is not very profitable, it is getting very costly to operate as a body corporate with a small capital and MF is restricted by its objects clause to pursue other business opportunities.
iii. MF was advised that a partnership must not have more than 20 partners all of which must be individuals. MF has 50 members. MF cannot form a normal partnership firm because according to Partnership act 1961, the maximum number of partnership is 20 members unless it is a professional partnership, so MF only can form limited liability partnership. According to Section 6 of LLP Act 2012, any two or more persons, consisting of individuals or bodies corporate, associated for carrying on any lawful business with a view to profit may form a limited liability partnership. Since MF Company want to convert their private limited company into Partnership Company they must convert everything from the private company to limited liability partnership. According to section 30(2) of LLP Act 2012, in relation to a private company converting to a limited liability partnership, means a transfer of the properties, interests, rights, privileges, liabilities, obligations and the undertaking of the private company to the limited liability partnership. MF must convert everything include the original members from the private to partnership. If any members want to leave or to join the company must wait until fully the company convert into LLP firm.
vi. An organization called Syarikat Sukawang Sdn. Bhd. (SS), a private limited company, has expressed its keenness to invest as a partner in the proposed LLP. MF is in need of new capital in order to venture into new businesses and SS’s offer appears to be very attractive. According to section 6 of LLP Act 2012 state that, any two or more person,...
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