| Summary: | Limited Liability Partnerships (LLP) are a new vehicle that can be beneficial to protect
a partner's liability in bu ine s. LLPs enable expansion of businesses through the
sharing of capital, expertise, and many other aspects that are minimal in sole
proprietorship, or conventional partnerships businesses. LLPs have been introduced in
Malaysia, and have the legal status of a body corporate, under the Limited Liability
Partnership Act 2012. This legal treatment ofLLP is similar with Singapore, India, and
the United Kingdom. The governance of LLPs is important to ensure ethical business
conduct _ similar to other types of business. At present there is no governance
framework for LLPs. As a hybrid business vehicle, LLPs require a special governance
framework, different than companies, because despite having the status of a body
corporate, the internal legal framework of LLPs is based upon partnership agreements,
which are akin to partnership laws. This research aims to propose a tailored corporate
governance framework f r Malaysian LLPs. There are three important research
objectives: firstly to identify who are the stakeholders of an LLP, and what are their
rights and duties are in an LLP; secondly, to analyses the internal and external
regulations of LLPs; and thirdly, to propose a framework of corporate governance for
LLPs. This research's methodology is doctrinal in nature, whereby existing laws, rules,
and regulations that are relevant to the establishment of the LLP are referred to; and
secondary information is gathered from the literature to determine the best LLP
governance framework for Malaysia. This research also applies conceptual analyses of
theories ofneo-liberal norms for shareholder primacy and free market capitalism for the
Anglo-Saxon One-Tier model and the theories of stakeholder primacy, co
determination and managerialism for the Europe Two-Tier model.This research found
that there are some existing governance frameworks, namely the Anglo-Saxon One
Tier framework and urope Two-Tier framework that are relevant to designing a
suitable LLP governance framework. It is proposed that a two-tier framework is suitable
for the corporate governance ofLLPs in Malaysia. The framework indicates that at the
First-Tier level, the LLP should set-up a Corporate Governance Supervisory Board that
consists of stakeholders other than the partners, and also independent individuals or
business experts. This is to ensure that the supervisory board has partners that are
impartial from the LLP management board, and do not hold any personal interest in the
corporate governance process. They must be able to provide concrete advice to the
management board on how to implement proper governance in managing the LLP. The
econd- Tier is the Management Board that is comprised of the LLP partners. None of
the management board shall b come partners of the corporate governance supervisory
board. The role of this board is to provide information to the supervisory board on the
LLP's business practices, and to ensure compliance with all corporate governance
standards. The separation of powers and impartiality of the parties in the LLP
governance framework are important to avoid any misconduct by the partners - such as
corruption or fraud, to manage any disputes between the partners, and to manage any
liability issues in any cases of any changes to the makeup of the partners, or LLP
dissolutions. TIllS will ensure the effectiveness of governance is fair to all members of
the LLP.
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