A Closer Look At A Limited Partnership As A Business Entity
Another type of partnership which can exist as a business organisation in Singapore is the Limited Partnership (LP). Unlike a partnership, a limited partnership is characterised by a partnership between at least one general partner and one limited partner. This dynamic is largely defined by the extent of each of the partners’ legal status in the organisation.
A limited partnership can be composed of individuals or a corporate body (either a company or a limited liability partnership).
Unlike a partnership, a limited partnership has no limit in the number of partners included in the entity. However, a limited partnership is not considered a separate legal entity. Although the general partner has unlimited liability in the limited partnership, the limited partner has limited liability. In the event of legal suits, partners in a limited partnership can sue and be sued using the name of the firm. However, the limited partnership cannot acquire properties in its name. In the event of losses as well as debts acquired by the limited partnership, it is the general partner who is personally liable for these. The limited partner can just be held liable for debts equivalent to his or her agreed contribution to the partnership.
When it comes to setting up a limited partnership, the same rules on partnerships apply: each of the partners, including the general and limited partners, need to be 18 years of age or older. If general partners are not residing in Singapore, they need to appoint a local manager who is either a Singapore citizen, Permanent Resident, or holder of Employment Pass or Dependent Pass.
Self-employed individuals who wish to register as a partner in a limited partnership, including those who will join an existing limited partnership or renew registration, will need to top up their Medisave account with the CPF board.
Just like the partnership, a S$65 set up fee will be collected. This includes S$15 application fee and S$50 registration fee. The government taxes profits of the limited partnership either at the partners’ personal income tax rates if the partnership is composed of individuals, or the corporate tax rate if the partnership is composed of a corporation.
A limited partnership becomes “live” once it has at least one general partner and one limited partner who meets the minimum requirements set forth by the law. Without a limited partner, a limited partnership ceases to go “live”, and the general partners are just considered registered under the Business Registration Act.
A general partner can choose to close the limited partnership, or the Accounting and Corporate Regulatory Authority can revoke its registration upon failure to renew, or upon breach of any of the rule set forth by the law.