In Singapore, an LLP is a business entity that gives the owners the flexibility of operating like a partnership while enjoying a separate legal identity similar to that of a private limited company. The LLP is seen as a body corporate with a legal identity that is separate from the identities of the partners. Like a body corporate, the LLP has the right of perpetual succession which means that any change in partners will have no effect on its existence, its rights or its liabilities. An LLP can:
- sue and be sued in its own name
- acquire and hold property in its own name
- have a common seal on its own name and
- do everything in its own name that a body corporate can do.
Partners of an LLP will not be personally liable for any liabilities of the LLP. They may be held liable if any losses arise out of their own wrongful acts of commission or omission but they will not be liable for such losses from the acts of the other partners. The LLP must keep proper books of accounts, profit and loss accounts and balance sheets that reflect the true financial position. If this is not done, the LLP as well as every partner of the LLP is liable to prosecution and the penalty may be a fine or imprisonment or both. The LLP is also required to submit an annual certificate of solvency or insolvency to the Registrar (its inability or ability to pay its debts) which will be available to the public.
A partner in an LLP is defined as any person who has been admitted to the partnership of the LLP in line with the LLP agreement and every LLP is required to have at least two partners. The partner can be an individual, a local company, another LLP or a foreign company.
Applications for registration of a new LLP can be submitted online using BizFile which is ACRA’s electronic filing and information retrieval system. The application may be submitted from an office, a home or BizFile kiosks. The LLP can also hire the services of professionals such as lawyers and accountants or service bureaus to register online on its behalf. The LLP can commence business once it is incorporated with ACRA on the condition that no other approvals or licenses are required from other government departments.
An existing company can be converted into an LLP if the existing shareholders are going to be the partners in the LLP. The existing company should have no outstanding debts at the time of application for conversion. Similarly, an existing partnership can be converted into an LLP if the existing partners are going to be the partners in the LLP. You should read the relevant sections of the LLP Act to familiarize yourself with the effects that the conversion will have and the new legal requirements that it will impose. Legal advice may also be sought if appropriate. This conversion can be done online with the use of BizFile which is ACRA’s electronic filing and information retrieval system. The conversion fee is $100. The status of your existing partnership or company will be updated and the new registration number will be issued to the LLP.