The Limited Partnership ('LP') was introduced in 2009 and is the most recent business form to be introduced to Singapore. An LP is a business organisation that consists of one or more 'general partners' and one or more 'limited partners'.
LPs are in essence Partnerships and are created pursuant to an agreement between the partners ("the LP agreement"). They do not have a legal personality that is separate from their constituent partners. The Partnership Act as well as the general law applicable to Partnership applies to LPs subject to the provisions of the Limited Partnership Act 2008 (cap XX). The matters discussed above in relation to the formation of Partnerships and the relations of partners to each other apply to LPs.
LPs are formed in the same way as Partnership
The termination of LPs is similar to that for Partnership. There are, however, some differences which relate to limited partners. For example, limited partners are not entitled to dissolve the LP by notice. Also, an LP is dissolved on the death, dissolution, bankruptcy or liquidation of a limited partner.
In the event of the termination of an LP, its affairs are to be wound up by the general partners unless there is a court order to the contrary.
An LP may be registered under the Limited Partnership Act where it has limited partners that are registered as such under the Act. An LP is deemed to be a general practitioner unless one or more persons are registered as limited partners of the firm in accordance with the Act.
A Partnership can also be converted into an LP where one or more (but not all) of its partners register themselves as limited partners. The resulting LP formed must also register itself as an LP under the Limited Partnership Act. Where a person deals with a firm after it becomes an LP, that person is entitled to treat the firm as a general partnership until he has notice of the registration of that firm as an LP. He is also entitled to treat any person who was a partner of the firm as a general partner of the LP until he has notice of the registration of that person as a limited partner.
The registration of the LP is done through the lodging of prescribed documents by one of its general partners. Thereafter, the LP must comply with all the requirements set out under the Act such as the filing of changes in particulars of the LP, publication of its name and registration number on invoices and official documents and the keeping of proper accounts.
LPs registered under the Limited Partnership Act are not subject to the provisions of the Business Registration Act. Where the LP ceases to have any person named as its limited partner, its registration under the Limited Partnership Act will be suspended. Under such circumstances, the provisions of the Business Registration Act will apply to the LP.
Where every general partner of an LP is ordinarily resident outside Singapore, the Registrar may require a local manager to be appointed to be responsible for the discharge of all obligations attaching to the LP as prescribed by the Limited Partnership Act.
For income tax purposes, an LP will be treated as a partnership and not as a separate legal entity. This means that an LP will not be liable to tax at the entity level. Instead, each partner will be taxed on his or its share of the income from the LP. See Partnerships for details. Limited Partners
The key difference between LPs and Partnerships lies in the fact that LPs have 'limited partners'. A limited partner is defined as any partner who, under the terms of the partnership agreement, shall not be liable for the debts or obligations of the firm beyond the amount of his agreed contribution. The limited partner is thus said to enjoy 'limited liability' status. Anyone who is not a limited partner of an LP is a general partner. General partners are regarded in exactly the same manner as partners in a Partnership and are liable for all the debts and obligations of the LP incurred while they are general partners.
Parties who wish to be limited partners in an LP have to register themselves as such under the Limited Partnership Act. Failing to do so will result in the limited partners being treated as if they were general partners of the LP thereby losing their limited liability status. Also, where a person deals with an LP after a partner becomes a limited partner, that person is entitled to treat that partner as a general partner of the LP until he has notice of the registration of that partner as a limited partner.
Limited partners should not take part in the management of the LP and should not have the power to bind the LP. Limited partners who take part in the management of the LP are liable for all debts and obligations of the limited partnership incurred while they so take part in the management as though they were general partners.
Subject to the LP agreement, limited partners may increase, reduce or draw out their contributions with the approval of the general partners.
Any distribution of capital or profits to the limited partners must be refunded if the following conditions are present:
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