LP is a partnership consisting of two or more persons, with at least one general partner and one limited partner. There is no limit on the number of partners.

 

Legal Status of a LP

• LP is not a separate legal entity

• General partner has unlimited liability

• Limited partner has limited liability

• LP can probably sue or be sued in firm’s name

• LP cannot own property in firm’s name

• General partner personally liable for debts and losses of the LP

• Limited partner not personally liable for the debts or obligations of LP beyond amount of his agreed contribution

 

Yearly Statutory Obligations

• Yearly renewals (one year or three years)

• CPF Medisave Top-Up required before they can renew LP

 

Registration requirements for a LP

• At least one general partner and limited partner. Both can be individuals (at least 18 years old) or body corporate (company or LLP)

• If all general partners are resident outside Singapore, they must appoint a local manager who is residing in Singapore

• Self-employed persons must top up their Medisave account with the CPF Board before they register as a partner of a new LP, become a registered partner of an existing LP, or renew their LP registration

• Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee

 

Taxation of a LP

Profits are taxed at partners' personal income tax rates (if individual) and corporate tax rates (if corporation).

 

Continuity of business

• Partnership continues to exist as long the partners agree to keep the partnership subject to partnership agreement

• If there is no limited partner, the LP registration will be suspended and general partners are deemed registered under the Business Registration Act

• Once a new limited partner is appointed, the registration of the LP will be restored to “live” and general partners’ registration under the Business Registration Act ceases

 

Closing the Business

• Any changes must be submitted either by the general by filing a Notice of Cessation of Business Registration or dissolution of LP

• The Registrar can cancel the registration if it has expired and has not been renewed or Registrar is satisfied that the business is defunct

 

Our Opinion

This is not an attractive business structure for most entrepreneurs as it is similar to partnership except with the concept of a limited partner. The liabilities of limited partners are limited to their investment in the partnership (capital or property) and they are unable to participate in the management of the business.