My business partner took money from our business. Can I sue them in Malaysia?

Discovering that a business partner has been moving money out of the business is a shock, both financially and personally. What you can do depends first on how your business is set up.

Is the business a partnership or a company?

• Partnership (often registered as an enterprise with more than one owner): governed by the Partnership Act 1961 and any partnership agreement. Partners deal with each other directly.
• Private limited company (Sdn Bhd): a separate legal person governed by the Companies Act 2016. The money belongs to the company, and claims are usually brought by or for the company.

Check your business registration, partnership agreement or company constitution, and shareholders' agreement.

What duties does a partner owe?

The Partnership Act 1961 sets out duties partners owe one another, including duties to render true accounts and full information on matters affecting the partnership, and to account to the firm for any benefit a partner gets from partnership transactions or property without the others' consent. A partner who takes partnership money for personal use may be ordered to account for it and repay it.

Common remedies include an order for accounts, repayment, and in serious cases dissolution of the partnership by the court.

What if it is a company?

Under the Companies Act 2016, directors must act for a proper purpose and in good faith in the best interests of the company, and must not misuse company property or information for themselves. If a director takes company money:

• the company can sue the director;
• if the wrongdoer controls the company, a shareholder may apply to court for leave to bring a derivative action in the company's name;
• a shareholder treated unfairly may apply for relief against oppressive or unfairly prejudicial conduct.

These are technical procedures; get advice on which route fits.

Is it also a crime?

Taking money entrusted to you and dishonestly using it for yourself may amount to criminal breach of trust under the Penal Code. You may lodge a police report, but a criminal case is decided by the police and the prosecution, and does not by itself return your money. Many people pursue a civil claim as well. See cheating vs criminal breach of trust.

Make any police report truthfully and stick to facts you can support with documents.

What are the steps?

1. Secure the records: bank statements, accounting files, invoices, payment approvals, messages. Ask the bank for statements if you are a signatory.
2. Do not tamper with or delete anything, and do not take the other side's personal property.
3. Protect the accounts: review bank mandates and signing authority under your agreement or constitution.
4. Ask for an explanation and account in writing, with a deadline. See the letter of demand guide.
5. Get an accountant to trace the transactions if the sums are large.
6. Get legal advice on a claim for accounts and repayment, urgent orders to preserve assets, and whether to make a police report.

Have a question about your own situation? Ask on WhatsApp

Example

Daniel and Wei run a café as a partnership. Daniel notices transfers from the business account to an account in Wei's name. He downloads statements, asks Wei in writing to explain each transfer within 14 days, and asks an accountant to reconcile the books. When Wei cannot explain the payments, Daniel files a claim for an account and repayment.

Common mistakes

• Emptying the business account in retaliation.
• Locking a partner out without checking the agreement.
• Making accusations on social media, which can lead to a defamation claim.
• Waiting until records disappear.
• Suing personally for loss that belongs to the company.

When to speak to a lawyer

Speak to a lawyer early, especially if money is still leaving the business, records are at risk, or you need urgent orders. You can contact us; every case depends on its facts.

Frequently asked questions

We never signed a partnership agreement. Can I still claim?

Yes. The Partnership Act 1961 applies to partnerships even without a written agreement. See also claiming without a written agreement.

Can I freeze their bank account?

Courts can grant urgent orders to preserve assets in suitable cases, but the requirements are strict. Get advice quickly.

Will a police report get my money back?

Not by itself. Recovery normally needs a civil claim and enforcement.

Can I just take my share and leave?

Taking money yourself can expose you to the same claims. Use the agreement and the legal process.

What if my partner says the money was a salary or loan?

The documents will matter. An account will show what was agreed and what was taken.

Sources & fact check

Legal points in this article were checked against the primary sources below. The law can change; this is general information, not legal advice.

1. Partnership Act 1961 (Act 135), AGC Laws of Malaysia
2. Companies Act 2016 (Act 777), AGC Laws of Malaysia
3. Penal Code (Act 574), Attorney General's Chambers Laws of Malaysia

Fact-checked on 17 Oct 2026