A Limited Liability Partnership (LLP) in Singapore pertains to a business entity which fuses the most desirable characteristics of a Company and a Partnership, that is, it has the ease of set up and flexibility of an ordinary partnership and the separate juridical personality and limited liability attribute of a company. Because of these features, a Limited Liability Partnership is often preferred by chartered professionals such as consultants, accountants, lawyers and architects who collaborate with the goal of increasing their service capacity while maximising their strengths and limiting their liabilities.
General Characteristics of a Singapore Limited Liability Partnership (LLP)
Limited Liability of Partners
As its name suggests, in a Limited Liability Partnership, the partners’ liabilities are only to a limited extent. This means that partners are insulated from and cannot be held personally liable for debts or obligations beyond the contributions given by them.
The general rule that the liability of limited partners is only up to the extent of their contribution, however, is subject to the exception that the liabilities incurred are not arising from their own gross negligence or wilful misconduct.
To illustrate, a Limited Liability Partnership indebted by an amount of S$500,000 by virtue of a contracted loan or a legal proceeding, and later on unable to pay due to insufficient assets, may not hold the personal assets of a limited partner accountable for the unpaid debt, except only to the extent of the S$100,000 initial investment/capital given by him to the partnership.
A Limited Liability Partnership (LLP) has its own Juridical Personality
A Limited Liability Partnership has a juridical personality separate and distinct from its partners. This business entity, by legal fiction, is constituted as a body/juridical person endowed with certain rights and obligations upon compliance with certain conditions imposed by the law.
Partners may be a natural person or juridical entity
Unlike a company whose directors must be a natural person, a limited partnership may consist of individuals or corporate entities.
No minimum contribution required
One who desires to be a limited partner is not required to contribute a minimum capital amount but is mandated to disclose to the Registrar the amount of his contributions. He is likewise required to notify the Registrar of his intent to withdraw his capital contributions in the future.
Powers of a Limited Liability Partnership (LLP)
Among the powers of a Limited Liability Partnership are as follows:
It can sue and be sued in its own name
A Singapore LLP has a distinct juridical personality which allows it to engage in litigation and become a plaintiff or a defendant in courts of justice to prosecute its own claims or defend any claims against it.
It can exercise proprietorial rights
A Singapore LLP can purchase movable and immovable properties and register its ownership thereof under its own name.
It enjoys perpetual succession
This means that the existence of a Limited Liability Partnership still continues until it winds up its affairs voluntary or pursuant to court order and is not dependent on the lifespan of its limited partners. It being vested with a separate juridical personality, it perpetuates notwithstanding a partner’s resignation or demise.
Registration Requirements for a Limited Liability Partnership (LLP)
Registration of a Limited Liability Partnership is made with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. To save time and ensure that the process is done in compliance with the relevant statures such as Companies Act and Law on Partnership, both local and foreign entrepreneurs are advised to procure the services of a professional corporate services firm.
Listed below are some of the statutory requirements when registering a Limited Liability Partnership in Singapore:
- There must be at least two partners (if natural person, must be of legal capacity) who shall constitute the partnership.
- There must be a manager whose qualifications are as follows: must be a natural person and an ordinarily resident in Singapore and at least 18 years of age. If a partnership consists of foreign partners unwilling to relocate, then appointment of a local manager is necessary. An LLP manager must not be disqualified under relevant statutes, meaning he must not be:
- Declared by the court as an undischarged bankrupt
- An unfit manager of an insolvent Limited Liability Partnership
- Previously a manager of a former Limited Liability Partnership which has been involuntarily closed/wound up in order to protect national security or interest
- Convicted of offences involving fraud or dishonesty, or other offences in relation to the formation of a Limited Liability Partnership.
- The Limited Liability Partnership must have an actual physical address in Singapore.
- On-time submission of pertinent documents listed below is also required:
- Proposed name of Limited Liability Partnership which must be approved
- Particulars of limited partners as well as their managers (may present Singapore ID or foreign passport
- Residence of the limited partners and managers
- Registered Office address of the partnership in Singapore
- Declaration of compliance
- Written Consent to Act as Manager
- Statement of Non-Disqualification to Act as Manager
- In case a corporate entity is a partner, company registration details are required (registration number and address)
Advantages and Disadvantages of Registering a Singapore LLP
The table below summarises the benefits as well as the drawbacks that come with setting up a Limited Liability Partnership:
|A Limited Liability Partnership has a juridical personality in the eyes of law, which endows it with certain corporate powers.||Transfer of ownership is complicated, as there are constraints under the law.|
|Partners have limited personal liability, thus they can only be held liable to the extent of their capital contribution.||A Limited Liability Partnership is not entitled to tax exemptions given to companies.|
|Setting up a Limited Liability Partnership is quick and easy. The process is simple and mandates fewer compliance requirements than an incorporated company.||It is prone to management disputes among partners, as each of them can act in behalf of the partnership.|
|Registration costs are lower compared to an incorporated company. According to ACRA, registration fees are currently at $115 ($15 for name application and $100 for registration).||It has limited access to financial resources compared to an incorporated company with greater number of investors.|
|Only one time registration is needed.|
|Share allotments and general meetings, although required in incorporated company, is not a statutory requirement in a Limited Liability Partnership.|
Why hiring Corporate Services Singapore is Beneficial to your Business
Before making a crucial business decision to establish a Limited Liability Partnership in Singapore, make sure you seek professional guidance from licensed incorporation experts. If you want to know more about setting up a Limited Liability Partnership in Singapore, and a detailed overview of how it works, including the statutory requirements under Singapore Law, contact Corporate Services Singapore today. We can help you make an informed decision regarding the business structure that best suits your business.