Singapore Limited Liability Partnership (LLP)
A Singapore Limited Liability Partnership (LLP) is a structure that allows a business to operate and function as a partnership while giving it the status of a separate legal entity with its own rights and liabilities distinct from those of its partners. An LLP is therefore a partnership where an individual partner’s own liability is generally limited. This is unlike a partnership where all the partners are personally liable for the costs, risks, debts and losses involved in the business.
Legal Status of Singapore LLP
In law, a Singapore LLP is a ‘body corporate’ that is formed by being registered under the Singapore LLP Act 2005. A Singapore LLP has a separate legal entity from its partners and its partners have limited liability. A Singapore LLP can therefore own property in its own name and sue or be sued in its own name. The partners of a Singapore LLP are personally liable for debts and losses resulting from their own wrongful actions but are not personally liable for debts and losses of LLP incurred by other partners.
Formation of a Singapore LLP
A Singapore LLP can be set up to run a business with a minimum of two partners. There is no restriction on the maximum number of partners in an LLP. The partners can be natural persons (at least 18 years old) or corporate bodies (company or LLP).
The mutual rights and duties of a Singapore LLP and its partners are generally governed by a limited liability partnership agreement. This typically sets out how the LLP will be run, including:
In the absence of an LLP agreement as to any matter, the First Schedule of the LLP Act 2005 will apply.
The partners of a Singapore LLP own and run the business. Unlike private limited companies, an LLP does not have directors, shareholders or secretary.
A Singapore LLP must appoint at least one manager who is a natural person of at least 18 years of age and who is ordinarily resident in Singapore and is either a citizen of Singapore or a permanent resident.
A Singapore LLP’s name must include the words ‘limited liability partnership’ or the acronym LLP’.
A Singapore LLP must have a registered office within Singapore to which all communications and notices may be addressed.
Registration requirements for a Singapore LLP
A Singapore LLP is registered with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. Foreign individuals must appoint a professional services firm to handle the registration process.
The LLP registration process in Singapore comprises name reservation and registration of the entity.
The following information and/or documentation will be required:
Following registration, any changes to the particulars of the LLP must be lodged with the Registrar within 14 days from the date of change.
Partners must carry out their duties and meet their legal responsibilities set out in the LLP agreement but compliance requirements for a Singapore LLP are much simpler than for a Singaporeprivate limited company. There are no statutory requirement for general meetings, directors, company secretary, share allotments, etc.
A Singapore LLP is required to keep its books up-to-date but is not required to file its accounts or have them audited.
The manager of a Singapore LLP must submit an annual declaration of solvency or insolvency to the Registrar, which must be lodged within the first 15 months from the date of the registration and subsequently once in every calendar year at intervals of not more than 15 months.
A Singapore LLP must ensure that its invoices and official correspondence bear the statement that it is registered as an LLP, together with its name and registration number.
Continuity in law
A Singapore LLP has a separate legal personality from its partners. Any changes in the LLP (such as the resignation or death of partners) therefore do not affect its existence, rights or liabilities. A Singapore LLP has perpetual succession until wound up or struck off.
A Singapore LLP is required to have at least two partners. If a Singapore LLP carries on business with fewer than two partners for more than two years, personal liability may attach to the remaining partner.
Closing of Business / Dissolution of Partnerships
A Singapore LLP may apply to ACRA to strike its name off the register. ACRA may approve the application if there is reasonable cause to believe that the LLP is not carrying on business and it can satisfy the criteria for striking off.
A Singapore LLP may decide to wind up if its affairs voluntarily if the partners are of the opinion that the LLP will be able to pay its debts in full within 12 months after the commencement of the winding up. It must appoint a liquidator and file the notifications required under the LLP Act.
If the partners are of the opinion that the LLP cannot by reason of its liabilities continue its business, an LLP may decide to opt for creditors’ voluntary winding up.
A Singapore LLP may also be wound up under an order of the Court under certain circumstances eg. the LLP is unable to pay its debts.