Partnership agreement in Malaysia: Template, Key Clauses and Local Law (2026)

What a partnership is in Malaysia In Malaysia a conventional partnership is governed by the Partnership Act 1961. It is a relationship between people carrying on a business in common with a view to profit. Unlike a company, a conventional partnership is not a separate legal person, so the partners themselves carry the liability, and in most trading partnerships the number of partners is capped at 20 under section 47 of the Act. Professional partnerships can be larger under other written laws. A partnership agreement, sometimes called a partnership deed, is not strictly required by the Act, because the Act supplies default rules where there is no agreement. But relying on the defaults is a mistake. The default profit split, the rules on bringing in and removing partners, and the rules on dissolution rarely match what the partners actually want, so a written agreement is how you take control of your own arrangement. Registration is separate from the agreement. A partnership that carries on business is registered with the Companies Commission of Malaysia (SSM) under the Registration of Businesses Act 1956, generally within a short period after it starts. This page is general information, not legal advice; confirm the current SSM timelines and your eligibility before you file. ## What Malaysian law requires - Governing statute. The Partnership Act 1961 sets the framework and the default rules for conventional partnerships.

• Partner cap. Most trading partnerships are limited to 20 partners under section 47. Certain professional partnerships can exceed this under other written laws.
• No separate legal person. A conventional partnership is not a separate entity, so partners are jointly liable for the firm's debts and obligations. Those who want limited liability often choose a limited liability partnership (LLP) under the separate LLP Act instead.
• SSM registration. A business run as a partnership is registered with SSM under the Registration of Businesses Act 1956, typically within 30 days of commencing, and registration is usually open to Malaysian citizens and permanent residents.
• Default rules fill gaps. If the agreement is silent, the Act decides profit sharing, management rights and how the partnership ends, so write the agreement to override the defaults you do not want. ## The clauses that differ in Malaysia - Registration and name. Register with SSM and use a name that SSM approves. Note the registration in the agreement.
• Liability and form. Decide between a conventional partnership and an LLP. A conventional partnership exposes the partners personally.
• Overriding the defaults. Spell out the profit split, management powers and dissolution rules, because the Act's defaults apply to anything you leave out.
• Dissolution triggers. The Act can dissolve a partnership on the death or bankruptcy of a partner unless the agreement says otherwise, so address continuity expressly. ## A Malaysia partnership agreement template you can adapt ``` PARTNERSHIP AGREEMENT Date: [date] Business name (as registered with SSM): [name] PARTNERS

1. [Full name, NRIC / passport, address]
2. [Full name, NRIC / passport, address] 1. BUSINESS The partners carry on the business of [activity] at [address] with a view to profit. 2. COMMENCEMENT AND DURATION The partnership begins on [date] and continues until dissolved under this agreement. The business is registered with SSM under the Registration of Businesses Act 1956. 3. CAPITAL Each partner contributes: [Partner] [amount / asset], [Partner] [amount / asset]. Capital accounts are kept for each partner. 4. PROFITS AND LOSSES Profits and losses are shared [equally] / [as follows: [shares]]. Drawings are allowed up to [limit] per [period]. 5. MANAGEMENT AND DECISIONS Each partner takes part in management. The following need [unanimous / majority] consent: [borrowing, admitting a partner, large contracts, selling assets]. Day to day matters are decided by [arrangement]. 6. BANKING AND ACCOUNTS The firm keeps proper books and a bank account in the firm's name. Cheques and payments above [amount] need [two] signatures. 7. ADMISSION AND RETIREMENT OF PARTNERS A new partner joins only with [unanimous] consent. A partner may retire on [number] months written notice. A retiring or deceased partner's share is valued by [method] and paid over [period]. 8. CONTINUITY The death, retirement or bankruptcy of a partner does not dissolve the partnership; the remaining partners may continue the business and buy out the outgoing partner's share. 9. DISSOLUTION On dissolution, assets are applied to pay debts, then to repay capital, then any surplus is shared per clause 4. 10. DISPUTES AND GOVERNING LAW Governed by the laws of Malaysia. Disputes are referred to [mediation, then arbitration / the Malaysian courts]. SIGNED [Partner] ____________ [Partner] ____________

- Ignoring the 20 partner cap for a trading partnership.
- No continuity clause, so one partner's death or bankruptcy can dissolve the firm.
- Forgetting SSM registration under the Registration of Businesses Act 1956.
- Choosing a conventional partnership when the partners really needed the limited liability of an LLP. ## Keeping a partnership agreement alive A partnership agreement is not a one time job. Partners join and leave, capital changes, the SSM registration has to stay current, and a decision rule only matters when a large contract or a dispute arrives. The work that outlasts the signing is keeping the current agreement, the registration and the partners' agreed powers in step, and knowing which clause governs when the partners disagree. That is the same problem any business has with its contracts, and a partnership makes it personal. Drafting from a clear template, spotting a clause that leaves a partner over exposed, editing a term in plain language and holding every version with its date can live in one AI workspace tuned to how your company contracts. [Adira](https://adiralaw.com) is built around that single workspace idea, deepest today on Indian corporate law, with Malaysia coverage on its roadmap rather than fully built, so treat its Malaysia depth as developing. For this partnership, the template and the local law points above stand on their own; the idea worth borrowing is that a contract and the filings around it are easier to trust when they live in one place.