How to set up a Limited Partnership (LP) in Singapore?
In a Singapore limited (LP) would be attractive to investors who do not wish to take active roles in the management of business and who wish to entrust the management of business to someone else who assumes unlimited liability.
The LP consists of one or more general partners and one or more limited partners. General partners are fully liable with their personal assets and can participate in the management of the LP. Limited partners on the other hand are only liable up to the amount they have contributed and do not have the power to bind the LP.
If a limited partner engages in the management of the LP, he will be treated as a general partner and lose his limited liability regardless of whether a third party was aware of his participation.
An LP is registered under the Limited Partnerships Act and- in distinction to the LLP – does not have a legal personality separate from its partners, i.e. it cannot sue or be sued and does not have the right to own property in its own name.
Elements of the LP’s partnership agreement:
- The responsibilities of the various partners for the running of the business
- Obligations that the partners have to each other
- Sharing of profits and liabilities of the firm amongst the partners
- How a partner may leave the firm
- Distribution of assets of the firm in case the partnership be dissolved
Note: LP is a relatively new business (2009) structure and many of the legal and tax issues have not yet been fully resolved.
The LP can only be created by registration of a new LP and cannot be converted from a company, business or Limited Liability Partnership (LLP).
First, an application for approval and reservation of the LLP name has to be filed with the Registrar. Upon approval an LP a foreign individual or company is is required to be registered online via BizFile with ACRA through a professional business registration firm.
During the registration of the LP, the lodger is required to indicate if the proposed LP falls under Regulation 12 of the LP Regulations which applis if a LP primarily establishes a fund for investment, and a “licensed fund manager” manages the fund. This also requires to indicate the name of the licensed fund manager in the application.
- Proposed name of the Limited Partnership
- Particulars of the LP partners/managers (foreign passport or Singapore ID)
- Residential address of the LP partners/managers
- Consent to Act as Manager and Statement of Non Disqualification to Act as Manager
- If partner is a company: Registration details of the company
- Declaration of compliance
ACRA will send an email notification confirming the Singapore LP registration. A business profile containing the registration details can be obtained as a softcopy via email from ACRA upon successful registration of the LP. Softcopies are usually sufficient to all purposes in Singapore.
Every LP must have at least one general partner and one limited partner. General partners and limited partners can be individuals, a company and an unregistered foreign company. There is no limit to the maximum number of partners. Any person above the age of 18 years old can be a partner of an LP.
Parties who wish to be limited partners in an LP have to register themselves as such under the Limited Partnership Act. Failing to do so will result in the limited partners being treated as if they were general partners of the LP thereby losing their limited liability status.
An LP must appoint a local manager (who is at least 18 years of age) if all the general partners are not “ordinarily resident” in Singapore.
The local manager is personally responsible for discharging all obligations of the LP. He is subject to the same responsibilities, liabilities and penalties as a general partner of the LP if the general partner defaults in respect of such obligation.
The manager of an LP must not be an undischarged bankrupt (unless he has obtained permission from the High Court or of the Official Assignee)
The Limited Partnership should
- Ensure that all its invoices and official correspondence bear the name of the LP, its registration number and a statement that it is registered with limited.
- Carry out business under the registered business name.
- Keep accounting and other records as under section 27(1) and (2) of the LP Act, and explain its transactions and financial position for at least 5 years. However these documents need not be lodged with ACRA.
- Notify ACRA immediately if there is a change of business particulars, such as a change of address, business activity or partners using BizFile.
- Notify ACRA the moment you decide to end the business using BizFile.