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Understanding
Limited Liability Partnerships (LLPs) in Singapore
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If you’re looking for a business structure that combines the flexibility of a partnership with the benefits of limited liability, a Limited Liability Partnerships in Singapore could be your ideal choice. In this comprehensive guide, we’ll provide you with a thorough understanding of LLPs, covering ownership, legal status, registration, taxation, and more.
Ownership:
An LLP is designed to offer flexibility in terms of ownership:
- An LLP must have at least two partners, with no maximum limit on the number of partners.
Legal Status:
Limited Liability Partnerships possess distinct legal characteristics:
- An LLP is a separate legal entity from its partners, providing legal separation between the partnership and individual partners.
- Partners in an LLP enjoy limited liability, meaning their personal assets are protected from business debts and losses.
- An LLP can initiate legal actions or be subject to legal actions in the name of the LLP.
- Unlike some other business structures, LLPs can own property in the name of the partnership.
- Partners are personally liable for debts and losses resulting from their own wrongful actions but are not personally liable for debts and losses incurred by other partners.
Yearly Statutory Obligations:
Operating an Limited Liability Partnerships (LLPs) in Singapore involves specific annual obligations:
- An annual declaration of solvency/insolvency must be lodged by one of the managers, indicating whether the LLP can or cannot pay its debts during the normal course of business.
- Unlike certain business structures, LLPs are not bound by statutory requirements for general meetings, directors, company secretaries, share allotments, etc.
Registration Requirements:
To establish an LLP in Singapore, certain registration criteria must be met:
- An LLP must have at least two partners, who can be individuals (aged at least 18 years) or body corporates (companies or Limited Liability Partnerships).
- At least one manager, who is ordinarily resident in Singapore and at least 18 years old, must be appointed.
- Undischarged bankrupts may need approval from the Court or the official assignee to manage an LLP.
Taxes
Taxation for an Limited Liability Partnerships (LLPs) in Singapore follows specific rules:
- Profits are taxed at the partners’ personal income tax rates if the partners are individuals.
- If the partners are corporate entities, profits are taxed at the corporate tax rate.
Continuity in Law:
An LLP enjoys perpetual succession until it is wound up or struck off, providing continuity in its legal existence.
Closing the Business:
Closing an LLP can be done through two main avenues:
- Winding up can be voluntary, initiated by members or creditors, or compulsory, ordered by the High Court.
- Striking off is another option for closing an LLP.
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