Singapore Limited Liability Partnership (LLP) - Registration Guide

Singapore offers plenty of options for entrepreneurs and enterprises to conduct business. Prior to 2005, in Singapore, a company was the only business structure with the limited liability protection to its shareholders. The spectrum of structure of business or corporate entity options available in Singapore was further extended with the passage of Limited Liability Partnership Act of 2005. LLP registration in Singapore is regulated by Accounting and Corporate Regulatory Authority (ACRA).

LLP as a Type of Business Entity

A Limited Liability Partnership type of business structure in Singapore is a hybrid variety sporting certain significant traits of a Partnership firm and company, with the traits of the former being more dominant. It integrates the limited liability feature of companies and operational flexibility of partnerships. As a legal entity, the LLPs have perpetuity, meaning changes in the partnership does not affect the existence or continuance of business.

LLP - Quick Facts

Liability

• A LLP is rendered a separate corporate legal identity in Singapore. Thus a LLP can own property, sue or be sued.
• From a tax perspective, LLPs are treated as partnerships and profits are treated as part of the each partners’ personal income and are taxed at personal income tax rates. Where the partner is an individual, his share of income from the LLP will be taxed based on his personal income tax rate. Where a partner is a company, its share of income from the LLP will be taxed on the tax rate for companies.
• A partner of the LLP cannot be held personally liable for the wrongful commission or omission of the any other partners.
• In the course of the business of a LLP, if a partner becomes liable to any person or company through his acts of commission or omission, the LLP is liable to the same extent as the partner. Therefore claims can be made against an LLP to the full extent of its assets.
• A partner during the course of the business is personally responsible for liabilities that arise due to his act of commission, omission, or negligence. Claims for liabilities can be made against him and his personal assets. However other innocent partners and their personal assets will remain insulated from such liabilities and their liabilities will be limited only to the capital contributed by them to the LLP.
• The mutual rights and duties of the Singapore LLP and its partners are governed by the limited liability partnership agreement. In the absence of agreement as to any matter, the First Schedule of the Limited Liability Partnership Act 2005 shall apply.

Members & Management

• There must be a minimum of 2 partners. However there is no cap on the maximum number of partners in a LLP.
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• The partners can be natural persons or companies
• 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.
• A proposed new partner requires the consent of all existing partners. Other matters are decided by majority vote, with each partner having one vote.
• Unlike Private limited companies, LLP in Singapore does not have directors, shareholder or secretary, instead the partners own and run the business.
• Every limited liability partnership must appoint at least one manager who is a natural person of at least 21 years of age and who is ordinarily resident in Singapore, a Singapore Citizen, Permanent Resident, Dependent Pass holder, Entrepass or Employment Pass holder.

Name & Address

• LLP’s name must include the words "limited liability partnership" or the acronym "LLP".
• Every limited liability partnership shall have a registered office within Singapore to which all communications and notices may be addressed.

Compliance

• 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.
• The manager of LLP must submit to the Registrar an annual declaration of solvency or insolvency; such declaration must be lodged within the first 15 months from the date of the registration of the LLP. Subsequently a declaration once in every calendar year must be submitted at intervals of not more than 15 months.
• Every limited liability partnership must ensure that its invoices and official correspondence bear the statement that it is registered as LLP, and the name and registration number of the limited liability partnership must be visibly printed on all its bills, invoices and official correspondence.
• Any changes to the particulars of the LLP must be lodged with the Registrar within 14 days from the date of change.

LLP - Documents Required

In order to register an LLP in Singapore, the following information/documents will be needed:

• Proposed LLP name
• Particulars of the LLP partners/managers as per the foreign passport or Singapore identify card
• Residential address of the LLP partners/managers
• Declaration of compliance
• Details of the registered address for the LLP
• Consent to Act as Manager and Statement of Non Disqualification to Act as Manager
• In case the partner is a company: Registration details of the company such as registration number, jurisdiction, registered address, etc.

LLP - Registration Procedure

All applications to register a new Singapore LLP are submitted online through ACRA's electronic filing and information retrieval system at http://www.bizfile.gov.sg. Locals can do it themselves, while foreigners must appoint a professional service bureau to carry out the registration. Even for local entrepreneurs, it is worthwhile to engage a professional services firm in registering an LLP as they have streamlined procedures for getting it done accurately and efficiently. The government fee payable for registering a new LLP is S$150. While fee for converting a partnership or Private Limited company into a LLP is S$100. Before registering a LLP, you need to file a Name Application. Application for approval of a business name can be submitted online via Bizfile. S$15 is payable for each approved company name. An approved name will be reserved for 60 days from the date of application. An application for the extension of the name reservation period, for another 60 days can be made by paying S$10 for each approved name. While proposing a name it is essential to ensure that it o is not identical or too similar to any existing local company or business names o does not infringe with any trademarks or copyright o is not obscene or vulgar o is not reserved Businesses of certain nature such as private schools, childcare centers, financial services, travel agencies, etc require licenses and permits hence the registrar may forward the name application to relevant authorities for comments before approval. The processing of the name approval application should normally take less than an hour. However, if the name conflicts with an existing name, has undesirable words, or require review by a referral authority, the processing of the name application may take 1-2 weeks.

LLP - Corporate Documents Issued

ACRA will send an email notification confirming the incorporation. ACRA does not issue any hardcopy certificate, unless specially requested by the company through an application the fee for which is $50.00. It takes about 7 working days from date of application. A business profile containing the important registered information on the LLP can be obtained as and when required from ACRA by making a payment of S$5. Upon successful payment an email will be sent to you within 30 minutes, with the URL link for you to view, print and download the information. If certified copies of the extracts are required for specific purpose then, a request for certified extract can be made. Such requests will be processed manually and certified copies of forms will be issued. Upon submitting request, within one working day ACRA will notify the amount to be paid. Upon receipt of payment, within one working day the certified documents will be either mailed or ready for collection.

LLP - Bank Account Opening

After registering the LLP, a bank account can be opened in any of the several international, foreign and local banks in Singapore. LLP may open a multiple account of various currencies or can also open a single multi currency account. Typically, the banks will require the following documents:

• Account Application Form(s)
• Partners’ Resolution of bank account and authorized signatories
• Certified True Copies of Photocopies of NRIC/Passport of all Partners and Authorized Signatories
• Partnership Agreement
• A latest print out of the LLP's business profile

The bank has the sole authority to approve or deny the opening of an account, normally the duration for opening an account upon submitting all the required documents may vary between minimum of two working days to a few weeks. The minimum account balance and the other bank charges vary depending on the banks.

Converting a Partnership or a Pte Ltd Company to LLP

An existing partnership business or a private limited company can also be converted into a Singapore limited liability partnership. A partnership firm or a private limited company can apply to convert to LLP only if its partners are comprised of all its existing partners or shareholders as the case may be. In the event of conversion of a partnership firm or a company into LLP, all movable and immovable property vested in the company, all assets, interests, rights, privileges, liabilities, obligations shall be transferred from the original entity and vested in the newly registered LLP. Any proceeding, any judgments in favor of or against the original entity, shall be continued, completed and enforced by or against the limited liability partnership. Any contract agreements to which the original entity was party to will be transferred naturally to the LLP. The limited liability partnership must ensure that for a period of 12 months starting from 14 days after the date of registration, every invoice or official correspondence of the limited liability partnership bears the statement notifying the conversion to a limited liability partnership from the date of registration and the original name and registration number before conversion.

LLP - Annual Filing Requirements

LLP is required to keep its books up-to-date so as to substantiate all the transactions and financial position of the LLP. Accounting and other financial records need to be maintained for 7 consecutive years, since ACRA may wish to inspect them. Failure to do so will lead to prosecution of all partner of the LLP and may attract fine or imprisonment.

The manager of LLP must submit to the Registrar an annual declaration of solvency or insolvency; such declaration must be lodged within the first 15 months from the date of the registration of the LLP. Subsequently a declaration once in every calendar year must be submitted at intervals of not more than 15 months.

Final Thoughts

Revolutionary ideas, incessant drive, lucrative network, common mission, pooled capital etc., are some or all of the elements that bring together individuals sharing social relationship or otherwise into partnerships fostering business relationships and commercial interest. Such partnerships have the potential to jeopardize the personal assets of innocent partners in the event of precarious performance of the business due to the acts of other partners. This novel type of entity is well received among entrepreneurs who enter into partnerships, yet would like formalize the setup by confirming to regulator’s compliance requirement. This also ensures financial discipline in the enterprise and bringing in potential investors is relatively easy than a partnership firm. By then Limited Liability Partnership, as a business structure was very popular in jurisdictions such as the USA and UK. In tune with the changing business needs and to be in tandem with the international developments, the government of Singapore after extensive public consultation and based on the recommendations of Company Legislative and Regulatory Framework Committee (CLRFC), gave the green signal for Limited Liability Partnerships in Singapore.