One aspect of Singapore's appeal as a worldwide center for business is how simple it is to form a Limited Liability Partnership (LLP). Being a flexible form of business entity, LLP has several advantages that make it the most attractive out of the lot for an entrepreneur or business owner. Therefore, this blog will take you through the key steps, which are necessary to register LLP Singapore.
A Brief Overview of LLPs in Singapore
An LLP is a form of business structure that has the flexibility of a general partnership and the features of protection offered by a company. In the case of an LLP, one partner shares in losses and profits, but he is responsible for his part of the business. Generally, the personal assets of a partner are protected from business debts beyond their investment.
Benefits of Registering an LLP in Singapore
Some of the many benefits of registering an LLP in Singapore are:
- Limited Liability: The personal assets of the partners are protected. This will encourage entrepreneurship and risk-taking.
- Flexibility: An LLP accords more flexibility in structuring internal governance than does a company. Most LLP constitutions offer partners more freedom to define profit-sharing and management arrangements.
- Tax Efficiency: LLPs are therefore taxed on the profits made, not on distributions made to the partners. This may be seen as much preferable compared to the corporate setup, where dividends are double-taxed.
- Fast and Streamlined Registration: LLP registration in Singapore is simple and can be processed online in a very convenient manner.
Key Requirements for Registration as an LLP
Before you decide to register, you have to fulfill the following simple requirements:
Minimum Number of Partners: The minimum number of partners to form a Limited Liability Partnership in Singapore is at least two partners. There is no limitation on the maximum number of partners.
Partners Nationality Requirement: Partners can be any individual with any nationality or residency status, though one of the partners should be a person normally residing in Singapore. This person could be a Singapore Citizen, Singapore Permanent Resident, or some individual holding either an EntrePass or an Employment Pass with clearance to work in Singapore.
Local Business Address: Every local LLP shall have a registered business address in Singapore. The address is used for official correspondence and maybe a physical or virtual office address.
Key Steps in Registering an LLP
Registering an LLP in Singapore involves several critical steps in the process. Among the most critical steps include:
Choosing a Unique LLP Name
Name of the limited liability partnership – The first step is to select a suitable name for the LLP. The following are some of the important considerations:
Availability Check: In the first place, the full check needs to be done at ACRA to check that no other business entity has been in existence and registered under the same name. In other words, the check for the availability of the name is readily available by way of online ACRA services.
Naming Regulations: The name should be cross-checked through the naming regulations by ACRA, and the name must be free of any sensitivity capable of being offensive, suggestive, or deemed obscene or restricted by authorities. Prior approval would also be needed in some cases for business designations or sensitive words.
Draft an LLP Constitution
The constitution of an LLP is a very essential document to register LLP in Singapore. It sets the internal governance framework of your LLP. This will be a document setting out the rights, responsibilities, and profit-sharing arrangements between the partners. Considerations in drafting the LLP constitution should include the following:
Key Partnership Details: Include essential details such as the name of the LLP, the business activities that it will undertake, and the duration of the partnership (if any).
Governance Structure: This is the outline of how the LLP will be managed. This can either be a partnership of management or all partners to participate equally in deciding. The constitution should further prescribe voting rights, mechanisms for resolving disputes, and procedures for admitting new partners or removing existing partners.
Contributions and Sharing of Profit: This clearly outlines the financial or service contributions to the LLP and how profit sharing will be affected, along with the sharing of losses among the partners. This may be based on the time commitment, capital contributions, or the pre-determined ratio agreed by all the parties involved.
Dispute Resolution: Describe a procedure that partners might use to settle arguments. Arbitration or mediation processes may be used in this.
Exit Strategy: Specify the procedure by which a partner may quit the LLP in the exit strategy. This involves the appraisal and payment of their portion of the LLP.
Appointment of Designated Partner (DP)
Every registered LLP in Singapore will have a minimum of one Designated Partner (DP). He carries a very important responsibility to ensure that the LLP will comply with regulatory requirements. So, why is the DP important?
Role and Responsibilities: The DP will be the main point of contact with ACRA and responsible for the filing of annual returns, the maintenance of details about the registration of the LLP, and the notification to ACRA of changes in the composition or particulars within the LLP.
Eligibility Criteria: A DP, to act as one, is neither to be an unsound mind nor to have previously been an undischarged bankrupt. He should possess a valid identification document of Singapore, such as a passport or an NRIC, and a residential address in Singapore.
Complete the LLP Registration with ACRA
Once all these necessary documents are ready, the LLP should proceed with the e-registration of the LLP with ACRA. The summary of the process is as follows:
SingPass and Corporate Access (CorpPass) Registration
SingPass is a Singapore government online single sign-on system, which requires all partners in the LLP registration. One of the partners is also required to be an online portal registered user of ACRA accessible through CorpPass, to permit the partners to electronically submit the registration forms and documents.
Helping you fill out the e-Registration Form with ACRA
ACRA provides an easy-to-use online e-registration form for incorporation of an LLP. Below is the usual information that needs to be furnished:
- Proposed LLP Name (as confirmed from the availability check)
- Detailed information on all partners (including their names, identification numbers, nationality, and residential addresses)
- Designated Partner (DP) Details that your Partners
- Registered business address of the LLP
- The business activities that the LLP will engage in
Payment of Registration Fee
Registration, however, invites some insignificant fees payable to ACRA. All these fees may be settled online at the time of submission of the e-registration form through different modes of payment.
Post-Registration Requirements and Ongoing Obligations
When you are done with the steps to register LLP in Singapore, here are some critical key points that need to be done as an ongoing responsibility to ensure that the LLPs are compliant.
Maintenance of the LLP Constitution
The LLP constitution is a living document. Any change in the partnership structure, profit sharing, or personal details of the partner has to be reflected in the constitution. It may be prudent that a copy of the updated constitution along with the records of the LLP is maintained. Appointing an Auditor (if applicable): Where the total number of partners in the firm is more than 20 or the turnover is above S$10 million annually, the LLP is required to appoint an independent external auditor to carry out the audit annually.
Filing of Annual Returns with ACRA
Every LLP must file its annual returns with ACRA. These are the latest documents requiring information on the financial status, ownership structure, and any other changes up to that particular year. Filing the annual returns on time is also a factor in determining whether good regulatory standing is being maintained or not.
Also Read: Understanding the Regulatory Landscape for Joint Ventures in Singapore