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.