Makcik Series: Partnership

Makcik Nasi Lemak Has A Question

A small roadside stall

A small roadside stall


Fathin met Makcik Nasi Lemak again. She smiled and greeted Makcik Nasi Lemak. “Good Morning Makcik ! How’s your day ? Have you registered your business at SSM ?”

“Hmm. Not yet Fathin. I’m thinking to do a partnership business with my friends. Would it be okay if I do the partnership business with 3 to 4 persons?”

“3 to 4 persons? If you want to be partner with 15 persons also can, Makcik, but it should not exceed 20 persons according to s.47(2) of Partnership Act.

“Oh okay. I think I want to do business under the name of WOOOONASILEMAKKK, How can I ensure that nobody have registered their business under this name ?”

“Yes Makcik ! You can also do that but you need to obtain approval from Registrar of Business at Suruhanjaya Syarikat Malaysia. You can take the Business Name Approval Form PNA.42 and fill in the form with three proposed business names. After that, the SSM will approve it according to the priority of the name.”

Makcik Nasi Lemak was happy to hear Fathin’s explanation. “Wow! It’s great! So Fathin, how do I ensure that if anything happens in the future, all of my partners will share the same liability ?”

“I suggest to you to invite your partners to sign a partnership agreement, which I’ll be happy to prepare one for you.”

Makcik Nasi Lemak smiled. She shook Fathin’s hand and thanked her.



Two men shake hands, in partnership

Some Points About Partnership Agreements

A partnership agreement is an agreement that establish the terms of the partnership, the right and responsibilities of the partner and also in the event if there is any dissolution to the partnership.

The main component of a partnership agreement normally include the following:-



– When setting up a partnership agreement, the partner should agree to have their own trade name to carry on the business and can only carry the business as the partner of the partnership. Besides that,  the partners should agree to set up a place to be their place of business as well as deciding the term of partnership. A part from that, you may consider to add a term where there is new partner whom interested to join the partnership which require consent from all partners.



– As for the financial matters, the partners shall agree how much capital that they will contribute to the partnership as well as the calculation for the profit and loss between all partners. More over, there shall be an account book under the partnership to record all transcations showing the income and expenses of the business. A part from that, there shall be an indemnication clause where the partners will be liable for the debts of other partner based on the proportion of partnership.



There shall be a proper management to manage and control the business affairs. Sometimes, there will be only one(1) person to manage the partnership and sometimes it can be more. Though there’s only one(1) person manage the operation but he still can delegate any power or authority relating to the business to any of the partner and it shall be valid and binding upon all partners. More over, the management will also be responsible to manage the partnership property which shall be registered in the name of partnership and in the proportion of the capital of each partner.



There shall be terms as for the dissolution of the partnership and in the event if there is any death of the partner as how will the partnership be affected. Usually, the partners will agree on the dissolution through a unanimous agreement between all partners. Meanwhile in the event of the death of the partner, the partnership shall not be terminate but the deceased partner will have share in the partnership to the end of the fiscal year.


In the case of  Malaysian International Trading Corp (Japan) Sdn Bhd v Bentini SPA & Ors [2014] 11 MLJ 25, where the dispute are mainly about the breach of contract by defendant as defendant has an obligation to make payment to the plaintiff for the contract of supply and delivery of main equipment, machinery and bulk material for the project in Sudan. The main issue in this case is that whether the plaintiff can claim against the first defendant by virtue of the partnership between the first defendant and the second defendant. It was held by the court that , there should be three elements to constitute partnership which are ; (1) There must be a business, (2) Carried out in common between the partners (3). Based on the facts, there is a partnership between the first and second defendant as the partner carry on the common business securing for the project and gain profit the said project.



A partnership agreement should be considered whenever a few friends are going into business together. It will help to define the terms of their co-operation and avoid problems in the future.



This article was prepared by : Fathin Nadhirah Binti Kasim.

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