Contribution of limited partner
Open ↗(1) Any contribution to be made by a limited partner to a Labuan limited partnership may be in the form of money in any currency, any other property, or services.
(2) Where the contribution of the limited partner is made or undertaken to be made otherwise than in cash—
(a) there shall forthwith be assigned to that contribution or part of that contribution or to that intended contribution or part of that intended contribution, in accordance with the partnership agreement, a value to be known as a statutory value; and
(b) the statutory value shall, for the purposes of this Act, be accepted as the value of that contribution or that part of the contribution or, of that intended contribution or that part of the intended contribution, as the case may be.
Rights and obligations of general partner
Open ↗(1) A general partner in a Labuan limited partnership shall have all the rights and powers and shall be subject to all the restrictions and liabilities of a partner in a partnership without limited partners except that, without the written consent or ratification by all the limited partners, a general partner has no authority to—
(a) do an act which makes it impossible to carry on the activities of the Labuan limited partnership;
(b) possess any Labuan limited partnership property, or dispose of any rights in any Labuan limited partnership property, for other than a partnership purpose; or
(c) admit a person as a general partner or a limited partner, unless the right to do so is given in the partnership agreement.
(2) A general partner shall, unless otherwise provided for in the partnership agreement or under this Act, carry out all the functions necessary and connected with the conduct of activities of the Labuan limited partnership, and shall discharge all obligations imposed on the general partner or on the Labuan limited partnership.
(3) A property of a Labuan limited partnership which is transferred to or vested in or held on behalf of any one or more of the general partners or which is transferred to or vested in the name of the Labuan limited partnership shall be held or deemed to be held by the general partner, or, if more than one, by the general partners jointly, as an asset of the Labuan limited partnership in accordance with the terms of the partnership agreement.
(4) A debt or an obligation incurred by a general partner in the conduct of the activities of a Labuan limited partnership shall be a debt or an obligation of the Labuan limited partnership.
(5) A general partner shall at all times act in good faith in the interests of the Labuan limited partnership.
Enforcement of judgments against property of Labuan limited partnership
Open ↗(1) Subject to subsection (3), no judgment shall be enforced against a property of a Labuan limited partnership unless the judgment has been granted against a general partner in that partner’s capacity as a general partner of that Labuan limited partnership.
(2) Creditors of a general partner or a limited partner, in that partner’s capacity other than as a general partner or a limited partner of the Labuan limited partnership, shall have no claim against the property of that Labuan limited partnership.
(3) Nothing in subsection (1) shall preclude the enforcement of an order of the court relating to the property of a Labuan limited partnership in any case where, by reason of any of the events mentioned in paragraph 26(1)(a) or (b), a judgment could not be granted against a general partner in that partner’s capacity as a general partner of that Labuan limited partnership.
Rights of limited partner
Open ↗(1) A limited partner has the same right as a general partner—
(a) during business hours, to inspect and make copies of or take extracts from the Labuan limited partnership books, documents and records; and
(b) to be given, on demand, true and full information of all things affecting the Labuan limited partnership and to be given a formal account of partnership affairs whenever circumstances render it just and reasonable to do so.
(2) A limited partner shall not be entitled to dissolve a Labuan limited partnership by notice except as expressly provided in the partnership agreement or as provided under subsection 26(3).
(3) Subject to any provision, express or implied, of the partnership agreement to the contrary, a Labuan limited partnership shall not be dissolved by—
(a) in the case of a limited partner who is an individual, his death, legal incapacity, bankruptcy, retirement or withdrawal from the Labuan limited partnership; and
(b) in the case of a limited partner which is a corporation, its dissolution, bankruptcy or withdrawal from the Labuan limited partnership.
Share of profits
Open ↗(1) A limited partner has, subject to this Act and the partnership agreement, the right to a share of the profits of the Labuan limited partnership.
(2) A limited partner may receive from the Labuan limited partnership a share of the profits stipulated for such limited partner in the partnership agreement only if, at the time when and immediately after payment is made, the Labuan limited partnership is solvent.
(3) For a period of six months from the date of receipt by a limited partner of any payment representing a share of the profits of the Labuan limited partnership in circumstances where the requirements of subsection (2) have not been met, such payment shall be repayable by such limited partner with interest at the prescribed rate to the extent that such share of the profits is necessary to discharge a debt or obligation of the Labuan limited partnership incurred during the period that the share of the profits represented an asset of the Labuan limited partnership.
Dealings by limited partner with Labuan limited partnership
Open ↗(1) A limited partner may lend money to, borrow money from and enter into transactions with, the general partner on behalf of the Labuan limited partnership.
(2) Except where the limited partner is also a general partner, a limited partner having, with respect to anything done under subsection (1), a claim against the assets of the Labuan limited partnership shall rank as a creditor of the Labuan limited partnership in respect of such claim.
(3) For the purposes of this section, a claim under subsection (2) does not include a claim for a return of capital contributions.
Limited partners’ rights as between themselves
Open ↗(1) Subject to subsection (2), limited partners, in relation to one another, shall rank—
(a) pari passu in respect of the return of their contributions; and
(b) pro rata to those contributions in respect of profits.
(2) Where there is more than one limited partner, the partnership agreement may provide that one or more of the limited partners is to have greater rights than the other limited partners as to—
(a) the return of contributions;
(b) profits; and
(c) any other matter.
Return of limited partner’s contribution
Open ↗(1) A limited partner shall not, on dissolution or otherwise, receive out of the capital of a Labuan limited partnership a payment representing a return of any part of his contribution to the Labuan limited partnership unless at the time of and immediately after such payment the Labuan limited partnership is solvent.
(2) For a period of six months from the date of receipt by a limited partner of any payment representing a return of contribution or part thereof received by such limited partner in circumstances where the requirements of subsection (1) have not been met, such payment shall be repayable by such limited partner with interest at the prescribed rate to the extent that such contribution or part thereof is necessary to discharge a debt or obligation of the Labuan limited partnership incurred during the period that the contribution represented an asset of the Labuan limited partnership.
(3) Notwithstanding the provision of this section, a limited partner shall not be liable to repay any payment representing a return of his contribution or part thereof, except—
(a) as provided in subsection (2); or
(b) in the case of fraud.
(4) Subject to subsections (1) and (2), a limited partner may demand payment representing the return of all or part of his contribution—
(a) on the dissolution of the Labuan limited partnership;
(b) at the time specified in the partnership agreement for its return; or
(c) after he has given six months’ notice in writing to all other partners if no time is specified in the partnership agreement either for the return of the contribution or for the dissolution of the Labuan limited partnership.
(5) A limited partner has, notwithstanding the nature of his contribution, only the right to demand and receive money in return for it, unless—
(a) there is a statement to the contrary in the partnership agreement; or
(b) all the partners consent to some other manner of returning the contribution.
(6) In this section, “payment” includes the release of any obligation forming part of the capital contribution, and any liability to make repayments pursuant to subsection (2) shall be construed accordingly.
Limited partner’s liability to Labuan limited partnership
Open ↗A limited partner shall be liable to the Labuan limited partnership for the difference, if any, between the value of money or other property contributed by that limited partner to the Labuan limited partnership or the statutory value and the value of money or other property specified in the documents kept under subsection 9(5) to be contributed by that limited partner to the Labuan limited partnership.
Limited partner’s liability to creditors
Open ↗(1) Except as provided in this Act, a limited partner shall not be liable for the debts and obligations of the Labuan limited partnership.
(2) A limited partner shall not be liable as a general partner unless the limited partner participates in the management of the Labuan limited partnership.
(3) Subject to subsection (4), if a limited partner participates in the management of the Labuan limited partnership in its dealings with persons who are not partners, that limited partner shall be liable, in the event of the insolvency of the Labuan limited partnership, for all debts and obligations of the Labuan limited partnership incurred during the period that the limited partner participated in the management of the Labuan limited partnership as though the limited partner were for that period a general partner.
(4) A limited partner shall be liable under subsection (3) only to a person who transacts with the Labuan limited partnership with actual knowledge of the participation of the limited partner in the management of the Labuan limited partnership and who then reasonably believed the limited partner to be a general partner.
(5) A limited partner shall not be deemed to participate in the management of a Labuan limited partnership within the meaning of this section by doing one or more of the following:
(a) being a contractor for or an agent or employee of the Labuan limited partnership or of a general partner or acting as a director, officer or shareholder of a corporate general partner;
(b) consulting with and advising a general partner with respect to the activities of the Labuan limited partnership;
(c) investigating, reviewing, approving or being advised as to the accounts or affairs of the Labuan limited partnership or exercising any right conferred by this Act;
(d) acting as surety or guarantor for the Labuan limited partnership either generally or in respect of specific obligations;
(e) approving or disapproving an amendment to the partnership agreement;
(f) voting on, or otherwise signifying approval or disapproval of, one or more of the following:
(i) the dissolution and winding-up of the Labuan limited partnership;
(ii) the purchase, sale, exchange, lease, pledge, hypothecation, or creation of a security interest, or any other dealing in any asset by or of the Labuan limited partnership;
(iii) the creation or renewal of an obligation by the Labuan limited partnership;
(iv) a change in the nature of the activities of the Labuan limited partnership;
(v) the admission, removal or withdrawal of a general or a limited partner and the continuation of the Labuan limited partnership thereafter;
(vi) transactions in which one or more of the general partners have an actual or potential conflict of interest with one or more of the limited partners;
(g) bringing an action on behalf of the Labuan limited partnership pursuant to subsection 22(3).
(6) Subsection (5) shall not be construed to imply that the possession or exercise of any other power by a limited partner will necessarily constitute the participation by such limited partner in the management of the Labuan limited partnership.
Admission of additional limited partners and general partners
Open ↗An additional limited partner or general partner shall not be admitted to a Labuan limited partnership except—
(a) in accordance with the partnership agreement or by consent of all existing partners; and
(b) by entry in the register under subsection 9(5).
Assignment
Open ↗(1) A limited partner shall not assign his or its interest, in whole or in part, in the Labuan limited partnership unless—
(a) all the limited partners and all the general partners consent or the partnership agreement permits it; and
(b) the assignment is made in accordance with the terms of the consent or the partnership agreement, as the case may be.
(2) An assignee of the interest, in whole or in part, of a limited partner shall not become a limited partner in the Labuan limited partnership until his ownership of the assigned interest is entered in the register under subsection 9(5), and until so entered the assignee has none of the rights of a limited partner exercisable against the partnership or against any of the partners other than the assignor.
(3) Subject to subsection (4), on becoming a limited partner, an assignee shall acquire the rights and powers and be subject to all the restrictions and liabilities that his assignor had in respect of the assigned interest immediately before the assignment.
(4) On becoming a limited partner an assignee shall not assume any liability of the assignor arising under subsection 14(3), 17(2) or 19(3) and, notwithstanding any term of the partnership agreement or any other agreement to the contrary, no such assignment shall relieve the assignor of any liability under those subsections.
(5) An assignment made under this section shall be registered with the Authority by the Labuan limited partnership.
(6) On the registration of an assignment under subsection (5) and upon payment of the prescribed fee, the Authority may issue a certificate to that effect.
(7) A limited partner who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.
Legal proceedings and service of documents
Open ↗(1) Except as provided in this Act, legal proceedings by or against a Labuan limited partnership shall be instituted by or against any one or more of the general partners only and no limited partner shall be a party to or named in such proceedings.
(2) A general partner or, with the leave of the court, any other person shall have the right to join in or otherwise institute proceedings against one or more of the limited partners who may be liable to the Labuan limited partnership pursuant to subsection 14(3), subsection 17(2), section 18 or subsection 19(3).
(3) A limited partner may bring an action on behalf of a Labuan limited partnership if any one or more of the general partners with authority to do so have, without reasonable ground, refused to institute such proceedings.
(4) For the purpose of this Act, service of a document on a general partner in respect of a Labuan limited partnership may be effected by leaving it at, or sending it by post to, the registered office of the Labuan limited partnership.
(5) Where a document or notice has been served in accordance with subsection (4), the document or notice is deemed to have been properly served on the Labuan limited partnership.
Authority of general partner to sign
Open ↗Where a general partner executes a document on behalf of the Labuan limited partnership, it shall be presumed in favour of any person who is not a partner that—
(a) the general partner has the authority under which he purports to act; and
(b) the executed document has been validly executed.
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).
