Setting up a business in Singapore can open doors to one of the most thriving economic hubs in Asia. Renowned for its ease of doing business, strategic location, and robust legal framework, Singapore is a magnet for entrepreneurs. Among the many business structures available, the Limited Partnership (LP) is gaining attention due to its unique benefits, especially for partnerships looking to balance liability with operational flexibility. In this article, we’ll walk you through everything you need to know about establishing a Limited Partnership in Singapore.
Read More: Set up your LLC in Singapore
What is a Limited Partnership in Singapore?
A Limited Partnership (LP) is a business structure that involves at least two partners: one general partner and one limited partner. The general partner has unlimited liability and is responsible for the management of the business. On the other hand, the limited partner enjoys limited liability, provided they do not take part in day-to-day operations or decision-making.
This structure allows businesses to combine capital investment from limited partners with the management expertise of general partners, making it an attractive option for investors who want limited liability but do not want to be involved in running the business.
Procedure to Establish a Limited Partnership in Singapore
The procedure to establish a limited partnership in Singapore are:
- Choose a Business Name: Select a unique name that complies with the Accounting and Corporate Regulatory Authority (ACRA) guidelines. You can check the availability of your desired name on ACRA’s online portal.
- Appoint a General and a Limited Partner: An LP must have at least one general partner and one limited partner. The general partner can be an individual or a corporation, while the limited partner can be either a local resident or a foreigner.
- File the Registration: Submit the necessary documents (discussed below) and file your application through BizFile+, ACRA’s online business filing portal.
- Pay the Registration Fees: The registration fee is S$100, and the process generally takes 1-3 working days if all documents are in order.
- Receive Your LP Registration Certificate: Once approved, ACRA will issue a registration certificate, and your Limited Partnership is now legally recognized.
Documents Required to Register an LP in Singapore
To register your limited partnership in Singapore, you need to require the following documents:
- Proposed Name of the LP: ACRA must approve this.
- Details of the General and Limited Partners: Including their names, addresses, identification, and in the case of corporate partners, registration details.
- Registered Business Address: This must be a physical address in Singapore.
- Consent to Act as Partner: Both the general and limited partners must provide written consent.
Requirements to Incorporate a Limited Partnership in Singapore
The list of requirements to incorporate a limited partnership in Singapore includes:
- Minimum of Two Partners: One general partner and one limited partner.
- Singapore Registered Address: A local physical address is mandatory.
- Local Manager: If all partners are foreign entities or individuals, a local manager must be appointed.
- No Minimum Capital Requirement: Singapore does not impose a minimum capital requirement for LPs.
- Annual Declaration: LPs must file an annual declaration confirming the general partner’s solvency.
Features of Limited Partnership in Singapore
Some of the features of limited partnership in Singapore are:
- Distinct Legal Entity: Although an LP is not considered a separate legal entity, it can still enter contracts, sue, or be sued under the general partner’s name.
- Unlimited and Limited Liability: The general partner is personally liable for debts, while the limited partner’s liability is capped based on their investment.
- No Perpetual Succession: The LP dissolves if there is only one partner left.
- Operational Flexibility: Only the general partner manages the business, giving investors (limited partners) freedom from day-to-day responsibilities.
Advantages of Limited Partnership in Singapore
- Limited Liability for Investors: Limited partners are only liable up to their investment, protecting their personal assets.
- No Corporate Tax: LPs are not subject to corporate tax. Instead, partners are taxed based on their share of the income.
- Attracts Investors: Because limited partners enjoy liability protection, LPs are an excellent structure for securing investments.
- No Annual Filing of Financial Statements: Unlike companies, LPs are not required to file financial statements, reducing administrative overhead.
Taxation for Limited Liability Partnerships in Singapore
Singapore’s tax regime for LPs is attractive. Unlike corporations, which are subject to corporate taxes, LPs enjoy pass-through taxation. This means that the income of the LP is taxed in the hands of the partners, not the partnership itself. Partners will pay taxes based on their personal income or corporate tax rates. Moreover, Singapore has a highly competitive tax regime with tax exemptions and incentives for new businesses.
Conclusion
Setting up a Limited Partnership in Singapore offers an excellent mix of flexibility, liability protection, and tax benefits. It’s a perfect vehicle for businesses looking to attract investors while maintaining manageable operational oversight. With a streamlined registration process and minimal paperwork, establishing an LP in Singapore is a straightforward and rewarding endeavor.
OnDemand International specializes in helping entrepreneurs and businesses set up in Singapore. Whether you’re planning to launch a Limited Partnership or another business structure, our expert team is here to guide you through every step of the process. Contact us today for personalized assistance and ensure a smooth and compliant business setup in Singapore.
Frequently Asked Questions
1. Can a foreigner start a Limited Partnership in Singapore?
Yes, foreigners can be either general or limited partners in a Singapore LP. However, they may need to appoint a local manager if all partners are non-residents.
2. What is the difference between a Limited Partnership (LP) and a Limited Liability Partnership (LLP)?
An LLP offers liability protection for all partners, while in an LP, only the limited partners have liability protection. In an LP, the general partner has unlimited liability.
3. Is there a minimum capital requirement for LPs in Singapore?
No, there is no minimum capital requirement for setting up a Limited Partnership in Singapore.
4. How long does it take to register an LP in Singapore?
Typically, the registration process takes between 1-3 working days, provided all documents are in order.
5. What are the annual compliance requirements for an LP?
LPs are required to file an annual declaration confirming the general partner’s solvency. Unlike companies, they do not need to file financial statements.
