Limited liability partnerships (LLPs) in Singapore benefit from their distinct legal status. They also provide limited liability for their owners. Those who own an LLP also do not have to make any minimum financial contribution.
An LLP is another form of doing business in Singapore. A Limited Liability Partnership (‘LLP’) is a business organization comprising two or more persons associated for carrying on a lawful business with a view to profit that is registered as such under the Limited Liability Partnership Act 2005 (Act 5 of 2005). Despite its name, it is not regarded as a partnership. Therefore, the general partnership law does not apply to LLPs.
This means that instead of registering a business or a company in Singapore, interested parties may choose to register an LLP to carry out their business activities. The LLP will give the owners the flexibility of operating as a partnership whilst giving them limited liability. It combines the benefits of a partnership with those of private limited companies. The LLP is a body corporate and has a legal personality separate from its partners. The LLP has perpetual succession. Any change in the partners of a LLP does not affect its existence, rights, or liabilities.
An LLP is capable of:
Suing and being sued in its name
Acquiring and holding property in its name
Having a common seal and
Doing such other acts and things in its name, as bodies corporate may lawfully do and suffer.
All partners are considered LLP’s agents
Every partner of the LLP is regarded as an agent of the LLP. However, the LLP is not bound by the acts of a partner that are not authorized where either this fact is known to the person dealing with the partner or the person does not know or believe the partner to be a partner in the LLP.
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The advantages of forming a Limited Liability Partnership
A Limited Liability Partnership (“LLP”) allows the partners to retain the flexibility of a partnership agreement but it is not regulated by an identical set of legal principles governing partnerships.
Must upkeep its financial records, as well as report its financial status of solvency or insolvency annually
When compared to a partnership, a LLP must upkeep its financial records as well as report its financial status of solvency or insolvency annually.
Cannot be terminates as easily as general partnership
Also, as the partners enjoy limited liability, it cannot be terminated as easily as a general partnership. The law provides a comprehensive set of rules to govern the winding up of LLPs to ensure protection to the creditors.
The disadvantages of forming a Limited Liability Partnership
Financial institutions and potential business partners may be more reserved for collaboration
However, as the LLP is a novel concept, we think financial institutions and potential business partners may be more reserved when dealing with it, as compared to a company or general partnership.
The law also places restrictions on certain categories of persons (see sections 33 to 37 of the Limited Liability Partnerships Act) who can manage a LLP.
Limited Liability Partnership FAQs
Can LLP have sleeping partners?Tiwi2021-01-18T13:27:26+08:00
No, because a wholly owned subsidiary of head office has only one shareholder. LLP must have at least 2 partners to be formed. However, if the number of shareholders in the wholly owned subsidiary is increased to 2 or more shareholders, conversion to LLP would then be possible.
Who can be the partners in an LLP?Tiwi2021-01-18T13:25:59+08:00