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Limited Partnerships in Singapore
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Are you contemplating a business venture in Singapore and exploring the diverse business structures available? A Limited Partnership (LP) might be the right choice for you. In this guide, we’ll delve into the essential aspects of Limited Partnerships in Singapore, including ownership, legal status, registration requirements, taxation, and more.
Ownership:
A Limited Partnership is a unique business structure that requires at least two partners, including one general partner and one limited partner. The key details are as follows:
- There must be a minimum of two partners; one serves as the general partner, and the other as the limited partner.
- Unlike other structures, there is no maximum limit to the number of partners in an LP.
Legal Status:
Limited Partnerships have distinct legal characteristics:
- An LP is not considered a separate legal entity; it operates as a partnership.
- The general partner bears unlimited liability, meaning they are personally responsible for all the LP’s debts and losses.
- In contrast, the limited partner enjoys limited liability, which means their personal liability is restricted to the agreed contribution they made to the LP.
- Partners can potentially initiate legal actions or be subject to legal actions in the name of the LP.
- Similar to other partnership structures, LPs cannot own property in the firm’s name.
Yearly Statutory Obligations:
Operating an Limited Partnerships in Singapore comes with specific annual obligations:
- LPs must undergo yearly renewals, offering the flexibility of one-year or three-year renewal periods.
- Self-employed partners, whether general or limited, must top up their Medisave accounts with the Central Provident Fund (CPF) Board before they can renew their LP registration.Limited Partnerships
Registration Requirements:
To establish an LP in Singapore, certain registration criteria must be met:
- An LP must have at least one general partner and one limited partner. Both can be individuals (aged at least 18 years) or bodies corporate (companies or Limited Liability Partnerships).
- If all general partners are ordinarily resident outside Singapore, they must appoint a local manager who is ordinarily resident in Singapore.
- Self-employed partners must fund their Medisave accounts with the CPF Board before registering as a partner of a new LP, becoming a registered partner of an existing LP, or renewing their LP registration.
- Undischarged bankrupts may need approval from the Court or the Official Assignee to manage an LP.
Taxes:
Taxation for an Limited Partnerships 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:
The existence of an LP is subject to the terms outlined in the partnership agreement. It provides flexibility for partners to define the LP’s terms and conditions.
Closing the Business:
Closing an Limited Partnerships in Singapore can be done in two ways:
- The general partner can formally cease the business or initiate the dissolution of the LP.
- The Registrar has the authority to cancel the LP’s registration if it is not renewed, or if the Registrar deems the business to be defunct.
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