article/Limited Liability Partnership

Incorporation

Limited Liability Partnership

A partnership is a business firm formed by at least two partners. There are three types of partnerships in Singapore: General Partnership, Limited Partnership (LP) and Limited Liability Partnership (LLP). Amongst them, LLP is the most attractive vehicle to form a partnership.

Packages & Fees

Characteristics

Introduced in Singapore in 2005, Limited Liability Partnership (LLP) offers owners the flexibility of operating as a partnership while having a separate legal identity like a private limited company. This means that the LLP is seen as a corporate body and has a legal entity separate from its partners, and its partners have limited liability. The LLP also has perpetual succession, thus allowing changes of partners without affecting its existence, rights or liabilities. It can sue or be sued, and can own property in its name.

An LLP can be formed with at least two partners, with no maximum number of partners. Profits distributed are taxed at the partners' personal income tax rate for an individual partner, or corporate tax rate for corporation partner

The LLP structure is suitable for professional firms such as law and accountancy.

Compliance Requirements

Partner Company A partner can be a person (at least 18 years old), a local company, a foreign company, or another LLP that has been admitted as an equal owner in the LLP, according to the LLP agreement. 100% local or foreign ownership is allowed.
Business Name A Business Name (in English) that cannot be identical or similar to another business name or existing trademark, or contain any offensive or vulgar words, and requires ACRA approval.

Registered Address registered office address in Singapore and cannot be a PO Box.
Manager At least one manager who is an ordinarily resident in Singapore (at least 18 years old and not disqualified under the Companies Act).

Pros and Cons of a Private Limited Company

A partner cannot be held personally liable for any wrongful act of other partners in an LLP
LLPs are quick and easy to set up, with a one-time registration.
There are low registration cost and fewer regulatory obligations compared to a private limited company.
There is no statutory requirement for general meetings, share allotments, etc.
Only an annual declaration of solvency lodged by the manager to the authorities is required, stating whether the LLP is able or not able to pay its debts during the normal course of business.

It is probably harder to attract capital investment or obtain loans from financial institutions compared to a private limited company.
As individual partners are not obligated to consult with other partners in business dealings, there is potential for disagreement amongst partners. For the protection of the business, an LLP should create a partnership agreement, outlining the authority and responsibilities of each partner.

Note

VOPlus can advise you on the most suitable type of business entity for your business and help you convert a private limited company in Singapore promptly. Contact us today for a consultation!