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Understanding Business Entity: Limited Partnership (LP)

Updated: Jun 17, 2023


Limited Partnership

Definition: A partnership consisting of two or more persons, with at least one general partner (GP) and one limited partner (LP).


Ownership:

  • Must have at least two partners, one GP and one LP, with no maximum limit.

Legal status:

  • Not considered a separate legal entity.

  • The GP has unlimited liability.

  • The LP has limited liability.

  • The partnership can be sued or can sue in the name of the firm.

  • The partnership cannot own property in its name.

  • The GP is personally liable for the debts and losses of the LP.

  • The LP is not personally liable for the debts or obligations of the LP beyond the amount of their agreed contribution.

Registration requirements:

  • Individual partners must be at least 18 years old.

  • Body corporate (company or LLP) is allowed as a partner.

  • If all GPs are ordinarily resident outside Singapore, a local manager who is ordinarily resident in Singapore must be appointed.

  • Self-employed individuals must contribute to their Medisave account with the CPF Board before registering or renewing the LP.

  • Undischarged bankrupts require court or Official Assignee's approval to manage a business.

Formalities & expenses:

  • Quick and easy setup process.

  • Easy administration and management.

  • Minimal registration costs.

  • Fewer compliance requirements.

  • Registration must be renewed annually or every three years.

Set up fees:

  • SGD 15 for name registration.

  • SGD 100 for a one-year registration.

  • SGD 160 for a three-year registration.

Taxes:

  • Profits are taxed at the partner's personal income tax rates (if an individual) or corporate tax rates (if a corporation).

Continuity in law:

  • Continuity depends on the terms outlined in the partnership agreement.

  • If there is no LP, the LP registration will be suspended, and the GP is deemed registered under the Business Names Registration Act 2014.

  • Once the LP is appointed, the LP registration will be restored to active status.

Closing of entities:

  • The GP can close the entity through the cessation of business or dissolution of the LP.

  • Non-renewal of the registration upon its expiration.

  • The Registrar can cancel the registration if it is not renewed or if the Registrar determines that the business is defunct.

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