The Singapore Limited Partnership (Singapore LP) provides a flexible alternative to the Singapore company. It is a particularly attractive alternative for investors who want an entity with the characteristics of a corporation without the numerous compliance and disclosure obligations. This new type of business structure is considered especially suitable for private equity and fund management business as it allows passive investors to invest and obtain limited liability. The general partner takes on the role of operating the business.
How do you set up a Singapore LP?
All LPs must be registered with the Accounting and Corporate Regulatory Authority (ACRA) and the following details must be supplied:
- Name of the proposed LP;
- Confirmation that the partnership is limited;
- General nature of the proposed business of the LP;
- The principal place of business of the proposed LP and any other place where business is carried on;
- Name, identification, nationality and the usual place of residence of every person who is to be a partner of the LP. Where the person is a corporation, corporate name, place of incorporation, registration number and registered office is required;
- Confirmation of whether the proposed partner is a limited partner or a general partner;
- Full name, nationality and usual place of residence of the local manager (if appointed); and
- Term (if any) for which the proposed partnership is entered into.
There is no requirement to lodge the annual financial statements or have an audit performed but annual financial statements must be prepared.
An LP must be renewed each year or it will automatically lapse and be treated as a general partnership.
What are the roles of the partners and managers of a Singapore LP?
A Singapore LP must have at least one limited partner and one general partner. More can be appointed. There is no requirement for any of the partners to be resident in Singapore but a local manager is required to be appointed if all the general partners are not resident in Singapore.
The general partner is responsible for the day-to-day management and operation of the partnership and has liability for its debts and obligations to the extent that the LP cannot pay those debts and obligations. Either an individual or a corporation can be a general partner.
A limited partner’s liability is limited to the amount of capital they contribute. If the limited partner becomes involved in the management of the LP, then they take on the liabilities of a general partner.
The local manager must be an individual ordinarily resident in Singapore and is only required to be appointed if the general partners are not resident in Singapore. The local manager is personally responsible for the discharge of all obligations attaching to the LP under several provisions of the Limited Partnership Act. If the manager defaults on any of these obligations then the same liabilities, responsibilities and obligations that are imposed on a general partner will be imposed on the local manager.
What is the tax treatment of the Singapore LP?
For tax purposes in Singapore, an LP is treated as a general partnership. It is not taxed at LP level as it is treated for tax purposes as a “pass through” entity.
Angela Nicolson, Asiaciti Trust