Limited Partnership (LP) Registration Requirements
- All Singapore citizens
- Permanent Residents
- Employment Pass
- Dependent pass holders
- Foreign individuals and companies can register as long as a local resident manager is appointed
Requirements for Registration of LP
- Minimum 1 general partner and 1 limited partner
- Partners can be natural persons or corporate body
- Partners who are natural persons must be 18 years old and above
- At least one local manager must be appointed (see below for local manager eligibility) if all general partners are not “ordinarily residents” in Singapore
- No limit to maximum number of managers
- Medisave (Singaporean or PR only) must be paid up to date with CPF Board
- Cannot be an undischarged bankrupt or convicted of any offence involving fraud or dishonesty whether in Singapore or elsewhere
The local manager must be above 18 years old and be one of the following:
- a Singapore Citizen
- a Singapore Permanent Resident (PR)
- an Employment Pass (EP) holder
- a Dependant Pass (DP) holder
Information and Documents Required
- Proposed LP name
- Description of business activities
- Local business address
- Copy of Singapore ID/Passport for the partners/managers (if owner is a company, please provide certificate of incorporation, company profile showing details of its directors and also a memorandum appointing an individual as authorised representative to sign all documents)
- Residential address of partners/managers
- Consent to act as manager and Statement of Non Disqualification to act as manager
- Declaration of compliance
LP registration can usually be completed within 2 hours subject to name approval.
Features of a LP
- The partners can be natural persons, companies or natural persons and companies.
- There must be a minimum of 2 partners, with at least 1 general partner and at least 1 limited partner. There is no maximum number of partners in a LP.
- A general partner has unlimited personal liability and can be appointed as the manager of the LP. The general partner is responsible and liable for all actions, debts and obligations of the LP.
- A limited partner is not liable for any debts and obligations beyond his agreed investment in the LP. If a limited partner takes part in the management of the LP, he will have unlimited liability as if he were a general partner.
- A LP does not have a separate legal entity (i.e. it cannot sue or be sued in its own name and cannot own property).
- The LP can only be created by registration of a new LP. A company, business or Limited Liability Partnership (LLP) cannot convert to become a LP.
- For tax purposes, each partner will be taxed on his or its share of the income from the LP. Where the partner is a natural person, his income from the LP will be taxed at personal income tax rate. Where the partner is a company, its income from the LP will be taxed at corporate tax rate.
Tax for LP
Profits of a LP are treated as its owner’s personal income.
- If the owner of a LP is an individual, it is tax at personal income tax rate.
- If the LP is a company, it is tax at corporate tax rate.
- Limited liability for limited partners
The general partner bears unlimited personal liability for the debts and obligations of the LP. The limited partner enjoys limited liability and will not be accountable beyond his agreed contribution in the LP.
- Ease of Compliance
Like Sole proprietorship and partnerships, there is no need to audit or file annual returns with ACRA.
LP must keep accounting and other records to explain its transactions and financial position for at least 5 years.
ACRA will require the LP to produce these records for inspection.
- The general partners do not have limited liability.
- If a LP does not have any limited partners, the LP registration will be suspended and the general partners will become registered under the Business Registration Act, instead. When a new limited partner registers, the LP registration will be restored and the registration under the Business Registration Act will cease.
- LP is generally more complicated and business owner will be penalize for higher tax rate without tax exemptions.