Limited Liability Partnership
What is a Limited Liability Partnership?
A Singapore Limited Liability Partnership (LLP) is a type of business with minimum of 2 partners and above.
Overview:
- 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
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.
- Perpetual succession: 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.
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
- An LLP does not command status as a private limited company
- There are constraints in the transfer of ownership
Compliance requirements
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 fulfill 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
