Accounting Records for an LLP: How Limited Liability Partnership Rules Differ from a Sdn Bhd

An LLP can operate for years without submitting a single financial statement to SSM — and this is where a common misconception about the structure lies. The absence of a filing requirement does not mean the absence of responsibility. Section 69 of the Limited Liability Partnerships Act 2012 still binds every Limited Liability Partnership to a record-keeping standard as strict as that of a company, and section 68 replaces the public financial statement with another instrument that carries personal liability for the partners: the solvency declaration.

What does section 69 actually require?

Section 69(1) provides that “every limited liability partnership shall keep such accounting and other records as will sufficiently explain the transactions and financial position” of the LLP, and which enable a profit and loss account and balance sheet to be prepared that give a “true and fair view” of its affairs.

Note who is bound. This obligation rests on the LLP and — where a breach occurs under section 69(6) — on every partner. This is not a duty that can be fully delegated to the compliance officer. Under section 27, the compliance officer is only responsible for acts under sections 17, 19 and 20 (registration and notice matters), not for record-keeping under section 69.

Three operational requirements arise from this section:

• Retention period. Records must be kept for a period of not less than seven years from the end of the financial year in which the relevant transaction was completed (s.69(2)).
• Place of keeping. Records must be kept at the registered office or any other place the partners think fit, provided the Registrar is notified, and must at all times be open to inspection by the partners (s.69(3)).
• Production on demand. The Registrar may, by written notice, require the LLP or any of its partners to produce the records for inspection (s.69(4)).

How does the annual declaration replace financial statements?

This is where an LLP most conspicuously departs from a Sdn Bhd. A company prepares financial statements (s.248 of the Companies Act 2016) and files them with the Registrar (s.259). An LLP does neither. Instead, section 68 requires an LLP to lodge an annual declaration by any two of its partners stating their opinion as to whether the LLP:

• is found able to pay its debts as they become due in the normal course of business; or
• is found unable to pay its debts.

This declaration is lodged annually within 90 days from the end of the LLP’s financial year (s.68(2)). For the first declaration, the deadline is no later than 18 months from the date of registration (s.68(3)). The Registrar may grant an extension of time if applied for and considered appropriate (s.68(4)). In practice, lodgement is done online through the MyLLP portal, but the opinion on solvency is the personal responsibility of two partners — not of the compliance officer who presses the submit button.

This is why section 69 and section 68 cannot be separated: a solvency declaration can only be made honestly if the accounting records under section 69 genuinely show the LLP’s financial position.

How does an LLP compare with a Sdn Bhd?

Matter	LLP (LLP Act 2012)	Sdn Bhd (Companies Act 2016)
Keep accounting records	Required, s.69(1)	Required, s.245(1)
Retention period	7 years from end of financial year, s.69(2)	7 years from completion of transaction, s.245(3)
Prepare financial statements	Not required by the Act	Required, s.248
File statements with SSM	Not required	Required, s.259
Audit	Not required, subject to LLP agreement, s.69(5)	Required, s.267 (unless exempted)
Approved accounting standards	Not referred to in the Act	Bound to approved standards
Annual submission to SSM	Solvency declaration, s.68	Annual return + financial statements
Entry within 60 days	No equivalent provision	Required, s.245(2)

The similarities remain important: both structures must keep records sufficient to give a true and fair view, keep them for seven years, and make them available for inspection. The difference lies in what an outsider sees — a Sdn Bhd discloses its numbered accounts to SSM, whereas an LLP declares only an opinion on solvency.

Who bears the risk if the records fail?

The penalties under the LLP Act 2012 are not symbolic. Three layers of penalty apply:

• Inadequate records (s.69(6)). The LLP and every partner commit an offence and can be fined up to RM50,000 or imprisoned up to six months or both.
• Failure to keep for seven years or at the correct place (s.69(7)). A fine of up to RM10,000, and for a continuing offence, a further fine of up to RM500 for each day.
• Failure to produce records to the Registrar (s.69(8)). A fine of up to RM50,000 or imprisonment up to six months or both.

The annual declaration carries an even heavier risk. Making a solvency declaration without reasonable grounds for that opinion can attract a fine of up to RM250,000 or imprisonment of up to two years or both (s.68(6)). Providing false or misleading information in a material particular can lead to imprisonment of up to three years or a fine of between RM250,000 and RM500,000 or both (s.68(7)). And if an offence under subsection (5), (6) or (7) is committed with intent to defraud creditors, the penalty is imprisonment of up to five years or a fine of up to RM1,000,000 or both (s.68(8)). Failing to lodge a declaration at all attracts a fine of up to RM20,000, with a daily fine of RM500 for a continuing offence (s.68(5)).

Can an LLP disregard accounting standards?

As a matter of LLP law alone, section 69 mentions neither MFRS nor MPERS. Its test is qualitative — the records need only be sufficient to produce a true and fair view. But disregarding standards entirely is rarely safe in practice:

• Tax. LHDN still requires records that enable an accurate computation of tax, regardless of the form of business.
• Financing. Banks and creditors typically require accounts prepared in line with standards before approving facilities.
• Solvency declaration. Two partners cannot form a reasonable opinion under section 68 unless the accounting records support it — making orderly accounting discipline a personal protection, not merely a formality.

Next steps

Before your LLP’s first financial year ends, confirm three things: that your record-keeping system genuinely explains every transaction (s.69(1)), that the records are kept at a location notified to the Registrar (s.69(3)), and that two partners are ready to sign a solvency declaration based on defensible figures. Also review your LLP agreement: if it requires an audit, section 69(5) no longer protects you from that obligation. For a full comparison of the two structures, see LLP versus Sdn Bhd, and for the equivalent company record-keeping standard, see accounting records under section 245.