Limited Liability Partnership in Singapore
4 minute read
A Singapore Limited Liability Partnership (LLP) is a type of business with minimum of 2 partners and above.
- An LLP is regarded as a formal partnership.
- An LLP can sue and be sued.
- An LLP can own property in its name. There are no personal liabilities for partners for any debts incurred by the company, which is regarded as a separate legal entity.
- An LLP shields one partner from the liabilities of other partners. This means that an individual partner remains liable for any losses incurred by their wrongful actions. No other partner can be held liable for such losses.
- LLP owners operate as a partnership, though they have a separate legal identity. This type of business in Singapore is suitable for professionals, including accountants, architects, lawyers, accountants and management consultants.
- Only Singapore Citizens and Permanent Residents (PR) are eligible to register an LLP.
Overview of the article:
- Company registration in Singapore
- Benefits of Registering
- Compliance requirements
- Disadvantages of a Singapore LLP
- Post-LLP Registration
- Closing an LLP
Company registration in Singapore
For company registration in Singapore, the following conditions must be met:
An application must be filed with the Registrar for the approval and reservation of the company name. The company name is reserved for not more than 120 days since the approval date. Thereafter, no extension is granted.
The business registration application is processed within 3 days and may extend up to 14-60 days. The delay is primarily due to the application being referred to other agencies for approval or review. The documents required for registration include:
- Residential address of partners as well as managers
- Registered office address
- Particulars of partners/managers, including Singapore ID and passport
- Proposed LLP name
- Copy of passport information of each partner
- Brief description of business activities
- Written consent to act as manager
- If a company is a partner, the documents needed include – A Declaration of compliance and LLP registration details.
- ACRA confirms the registration by sending an email notification. Registration details can be obtained along with a business profile via an email from ACRA following the successful registration of the company.
- An LLP must file a Declaration of Solvency annually and maintain records.
Benefits of Registering an LLP in Singapore
Separate legal entity
Since an LLP is regarded as a separate legal entity, partners are not liable for any debts incurred by the company. Their liabilities are only limited to the capital contributed to the company.
A limited liability business entity will continue to exist as long as it is not wound up.This is a huge attraction for investors since the business continuity is not affected in any situation, thus promising a stable and more secure outlook.
As per perpetual succession, any change in the partners does not have any effect on its rights, liabilities, or existence.
There are less stringent compliance requirements for a Limited Liability Partnership agreement. An LLP is not statutorily required to appoint a company secretary. There are no legal obligations to hold an annual general meeting for a Limited Liability Partnership agreement. It does not have to fulfil complex filing requirements such as annual accounts and tax returns. An LLP is statutorily obliged to make a declaration about its solvency or insolvency annually.
A Singapore Limited Liability Partnership can:
- Have a common seal under its name
- Acquire and hold property in its name
- Do activities in its name as legally required by bodies corporate
Disadvantages of a Singapore LLP
A Singapore LLP is not considered a business entity. This means its profit is taxed at personal income rate. If a company is a partner, its share of profit is taxable at the tax rate for companies. A few more disadvantages:
- An LLP does not command status as a private limited company.
- There are constraints in the transfer of ownership.
Business Profile and UEN Issuance
Upon successful registration of the LLP, a Unique Entity Number or UEN is provided. The UEN is shown on all forms of official correspondence, including bills and invoices. It is also used for any transactions with government agencies.
An LLP is required by law to maintain records and accounts that substantiate its financial position. All of these records are maintained for five years since the end of the financial year in which the relevant financial transactions are completed.
All records must be kept at an appropriate place where all partners can easily access the same and furnish the records when required by the Registrar.
For non-compliance, every partner can be penalised to a fine of S$10,000, or individual partners could face imprisonment for up to two years.
Renewal of Registration
There is no need for the renewal of LLP registration.
A partner may no longer be regarded as a partner in the wake of his death or dissolution. If there is no limited liability partnership agreement, a 30-day notice is given to other partners. The consent of all partners is required for the inclusion of a proposed new partner. A majority vote is needed for all other matters, with each partner exercising his vote.
Closing an LLP
An LLP may be closed in the following ways:
- The company may be struck-off by submitting an application to ACRA via BizFile+.
- The LLP may be voluntarily wound-up by members or creditors, or the High Court may shut the company down.
We are here to help entrepreneurs start/continue their journey in Singapore! Talk to our sales team to get started!