Limited Liability Partnership (LLP)
Established less than a decade ago, a Singapore LLP brings a good mix of part Company and part Partnership to the economy. Giving more options to entrepreneurs highlights the notion of understanding of the importance of being flexible in Singapore. Unlike the Unlimited liability Partnership, an LLP is a separate and distinct legal entity from its partners. The LLP provides limited liability to the partners during the course of its business and its compliance requirements are not as hefty as the Private Limited Company. However, a partner may still be held personally liable for claims from losses resulting from his own wrongful act or omission. So, what are you waiting for? Register LLP in Singapore and open up a whole lot of opportunities for your business.
Benefits of a Singapore Limited Liability Partnership (LLP)
- Good mix of flexibility and annual compliance requirements
- Annual audit of LLP financials are not mandated
- Minimal annual compliance as compared to a Singapore Private Limited Company
- A partner shall be indemnified from wrongful acts, omissions or debts incurred by other partners in the LLP
Registration Requirements of a Singapore Limited Liability Partnership (LLP)
- A minimum of 2 partners, can be a local company OR local or foreign individual
- 1 local resident manager if owners are foreign individuals
- A local registered office address (local residential addresses may be permitted, certain conditions apply)
- No paid-up capital requirement
A partner may cease to be a partner upon his death or dissolution or in accordance with the limited liability partnership agreement (if any) or, in the absence of such agreement, by giving 30 days’ notice to the other partners.
Particulars of each partner
Residential Address of each partner
The local business address for the partnership
Consent to Act as Manager and Declaration of Non-Disqualification to Act as Manager
If a partner is a company, registration details of that company
Declaration of Compliance.
The name of the company must include the words ‘Limited Liability Partnership’ or ‘LLP’.
Every limited liability partnership shall have a registered office within Singapore to which all communications and notices may be addressed.
LLP is required to keep its books up-to-date so as to substantiate all the transactions and financial position of the LLP, failure to do so may lead to prosecution and penalties.
An LLP in Singapore is not required to file its accounts or have them audited. Nor does it need to disclose its capital.
Types of Partnerships (with advantages/disadvantages)
In contrast to companies, a different type of business structure is known as a partnership. Partnerships combat the expansion constraints of sole proprietorships by allowing two or more people to establish and co-own a business. Unlike a private limited company, a partnership firm has no legal existence separate from its partners. It comes to an end with death, insolvency, incapacity, or retirement of a partner.
A general partnership is formed by a minimum of 2 individuals and a maximum of 20. Partners pay personal income taxes based on their share of income from the partnership. Partners are personally liable for the debts and liabilities of the company, due to the lack of legal identity outside the individuals. It is registered with ACRA under the Business Name Registration Act.
One type of general partnership is a limited partnership. It differs from a general partnership in that it includes a limited partner. Similar to a private limited company, the liabilities of a limited partner are limited to their investment in the partnership in the form of capital or property. These individuals are unable to participate in the management of the business.
The third and most recent type of partnership is a limited liability partnership. It combines the features of partnerships and companies. Registering an LLP gives owners the flexibility of partnerships while at the same time enjoying the benefits of a corporate body like a private limited company. An LLP must have at least two partners at all times. The main purpose of an LLP is for two or more professionals who would like to build a joint practice in a common field but is not suited for businesses. Owners must have detailed agreements about the division of profits and management responsibilities. Partners are usually responsible for managing their own clients based on their area of focus.
Why a partnership over a Pte Ltd?
There are many advantages to a partnership over a private limited company. One includes the ability to pool in capital and resources. With limited partnerships, additional capital can be sourced from partners who are willing to pitch in but are not ready to actively participate, limiting their exposure to liability. Another benefit is lowered costs to set up in comparison to company incorporation costs. On top of this, the ongoing compliance requirements are less stringent, saving administration time and resources.