Description
- A Partnership Agreement is a legally binding document that defines the terms and conditions of a partnership between two or more parties. It outlines the roles, responsibilities, profit-sharing arrangements, and dispute resolution mechanisms to ensure smooth collaboration and protect the interests of all partners.
GOV Department
- Suruhanjaya Syarikat Malaysia (SSM) / Companies Commission of Malaysia
License Name (Malay)
- Perjanjian Perkongsian
Details
- Specifies the roles and contributions of each partner, including capital, labor, or expertise.
- Defines profit-sharing ratios, management responsibilities, and decision-making processes.
- Includes provisions for the addition or withdrawal of partners.
- Covers dispute resolution, termination clauses, and confidentiality agreements.
- Ensures compliance with the Partnership Act 1961 and other relevant laws.
Important Rules
- The agreement must clearly define each partner’s obligations and rights.
- Profit-sharing and liability arrangements must be mutually agreed upon.
- Decisions on major business matters should follow the processes outlined in the agreement.
- Any changes to the agreement require unanimous consent from all partners.
- Partners must comply with applicable laws, such as tax regulations and reporting requirements.
Compound & Punishment
- Failure to formalize a partnership agreement may result in:
- Disputes over roles, responsibilities, or profit-sharing.
- Legal action or dissolution of the partnership in case of conflicts.
- Breach of the agreement can lead to:
- Financial penalties or claims for damages.
- Loss of rights to partnership profits or assets.
- Failure to formalize a partnership agreement may result in:
Advisor
Penny Lim , Legal Consulting
Ms. Penny is responsible for identifying possible legal issues and implementing solutions in the areas of government regulation, customer protection, and fair employment. Legal Counsel. Ms. Penny can advise on legal issues such as government and business permits, review legal documents before signing them, and complete legal research as needed by the company
Commonly Asked Questions
A Partnership Agreement is a legal contract that defines the rights, duties, and obligations of partners in a business, ensuring clarity on profit-sharing, responsibilities, and management.
It helps prevent misunderstandings and disputes by clearly outlining partner roles, profit distribution, and decision-making rules, providing a strong foundation for business collaboration.
While not legally required, a written agreement is strongly recommended to avoid conflicts and to comply with the Partnership Act 1961.
Any individuals or entities (including locals or foreigners) who agree to carry on business together with a view to profit can form a partnership, as long as it follows Malaysian laws.
Partnerships are regulated under the Partnership Act 1961, and registration must be made with Suruhanjaya Syarikat Malaysia (SSM).
Key elements include partner roles, capital contributions, profit-sharing ratios, dispute resolution methods, decision-making processes, and terms for admitting or withdrawing partners.
Yes. A general partnership can have up to 20 partners, except for certain professional practices (e.g., legal or accounting firms) which may have their own limits.
The agreement should specify exit procedures, including notice periods, settlement of accounts, and transfer of ownership or responsibilities.
Yes. Many Partnership Agreements include mediation or arbitration clauses to resolve disputes amicably before resorting to legal proceedings.
Without a formal agreement, the partnership will be governed by default provisions under the Partnership Act 1961, which may not reflect the partners’ intentions — potentially leading to disputes or unequal outcomes.