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FAQs  General Q&A


What are the benefits of converting from Private Limited companies to LLP?

Lower cost is one of the benefits, as there is no need to do audited accounts etc. However, there may be disadvantages as well and one may have to think through more carefully whether one should trade or do business with an LLP since it has limited liability.



If a company is a large corporation in terms of paid up capital, is it difficult to convert to LLP?

It is administratively easy to convert online, but the internal conversion process within the company may be simple or complex depending on the size of the entity that wishes to convert.



If the directors of company refuse to convert into LLP, but Shareholders want to convert the company, is the company still be able to be converted to LLP?

Yes, the decision lies with the shareholders.



Can a wholly owned subsidiary of head office be converted to a LLP?

No, because there is only one shareholder. LLP would need to have at least 2 partners. However, if the number of shareholders in the wholly owned subsidiary is increased to 2 or more shareholders, conversion would then be possible.



Is LLP inheritable, that is, pass the business down to the son?

Under the LLP Act, a partner of a LLP shall cease to be a partner of a LLP upon the death of the said partner.

Where this happens, unless otherwise provided in the LLP agreement, his personal representative or liquidator (as the case may be) shall be entitled to receive from the LLP an amount equal to the former partners capital contribution to the LLP and his right to share in the accumulated profits of the LLP after deduction of losses of the LLP and determined at the date the deceased partner ceased to be a partner. The personal representative or liquidator shall have no right to interfere in the management of the LLP.



Since company allows for

The LLP introduces a business structure that combines the advantage of the flexibility to run it like a partnership of two or more owners with limited liability accorded to the partners. It is not meant to apply to a sole proprietor. If the concept to a Limited Liability Sole Proprietorship is expanded, it will have far reaching implications on our legal framework for business structures. This is also not consistent with leading jurisdictions currently. A regulatory framework of an one director company differs from that of the LLP too.



Can professional practices register as LLP?

The LLP Act does not restrict any professional practices from registering as a LLP. However professional practices have to check against their legislation regulating their respective professions to ensure that this is allowed.



Can a LLP be converted back to that of a Company?

Currently, there is no provision for the conversion from a LLP back to a Company.



Does a foreigner-controlled LLP need to pay medisave?

Only Singapore citizens and PRs are required to meet the minimum medisave paid-up requirement. For more details, pls refer to http://www.cpf.gov.sg/



How is a LLP taxed? How is a company taxed after being converted to a LLP?

There is no corporate tax rate for LLPs. For further details, we advise members to seek clarifications from IRAS directly.



For taxation, will losses, capital allowances, investment allowances be carried forward?

ACRA does not handle taxation issue, please refer to www.iras.gov.sg or seek clarifications with IRAS directly.



How are the accounts of a LLP going to be accounted for after a company has converted to a LLP? How about GST registered co?

The LLP legislation does not prescribe the accounting standards to be used. The LLP Act mandates proper record keeping of accounts to enable the true and fair view of accounts to be presented. We think LLPs would apply Singapore FRS, unless there are exceptional reasons to rely on a foreign accounting standard.



It is unfair for creditors as the current partnerships can evade liability by just converting to LLP? What is the rationale/remedy for this?

The current regulation is that as long as there are no outstanding charges, conversion is possible if the relevant requirements are met. Even after the conversion date, the partners continue to be liable for all the liabilities incurred by the partnership before the conversion date. Any liabilities incurred after the conversion shall be borne by the LLP.



What happens to the amount owing to creditors when partnership is converted into LLP?

All the liabilities will be frozen and retained at the point of conversion into LLP. The creditors can still sue the partners or they can choose to sue the LLP.



Can a partner of LLP be a partner of another LLP?

Yes



What happens to shareholdings of shareholders converted from Private Limited to LLP? If person A holds 10% and person B holds 90% of shares in the company, what will happen when converted to LLP?

This will depend on the internal agreements between the newly converted partners and would most probably be reflected in the LLP agreement.



Can LLP have sleeping partners?

Yes.



If the Manager files with ACRA that it is unable to pay debts, what will happen after that?

It is up to the creditors to decide what they want to do with regards to the debts that are owed to them by the LLP.



What kicks in once a company declares that it is insolvent?

Our records will be updated to capture this information. It is up to the creditors to decide what they want to do with regards to the debts that are owed to them by the LLP.




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-CPA & B.Com (Uni Of Sydney)

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