Singapore Company vs Limited Liability Partnership (LLP)?

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Features

Company

Limited Liability Partnership (LLP)

Introduction

• One of the most preferred corporate vehicle for wider range of business journey

• Hybrid form of business vehicle consisting both company and typical partnership

Suitability of Business Vehicle

• Suitable for carrying all types of business activities including professional services

• Suitable to carry professional services such as Law Firm, Audit Firm, etc

Definition

• A business form which is a legal entity separate and distinct from its shareholders and directors

• A partnership where the individual partner’s own liability is generally limited

Ownership or Owners

• Exempt Private Company – 20 members or less and no corporation holds beneficial interest in the company’s shares
• Private Company – 50 members or less
• Public Company – can have more than 50 members

• At least 2 partners.
• No maximum limit.

Legal Identity or Status

• A separate legal entity from its members and directors
• Members have limited liability
• Can sue or be sued in company’s name
• Can own property in company’s name
• Members not personally liable for debts and losses of company

• A separate legal entity from its partners
• Partners have limited liability
• Can sue or be sued in LLP’s name
• Can own property in LLP’s name
• Partners personally liable for debts and losses resulting from their own wrongful actions
• Partners not personally liable for debts and losses of LLP incurred by other partners

Requirements For Registration or Formation or Incorporation

• Minimum of one share.
• Minimum Paid-up capital is S$1 (SGD One Only)
• At least one shareholder.
• At least one director ordinarily resident in Singapore, at least 18 years old.
• If a foreigner wishes to act as a local director of the company, he can apply for an EntrePass from the Ministry of Manpower (MOM).
• Undischarged bankrupts cannot be a director and cannot manage a company without approval from the Court or the Official Assignee.

• At least two partners, who can be individuals (at least 18 years old) or body corporate (company or LLP).
• At least one manager ordinarily resident in Singapore and at least 18 years old.
• Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.

Easiness of Registration

• An easy process to be completed within a few hours however subject to referral to different authorities which may delay up to 14 working days

• An easy process to be completed within a few hours however subject to referral to different authorities which may delay up to 14 working days

Level of Fees for Registration

• High when comparing to other form of business vehicles

• Low set up costs among all business vehicles

Renewal Costs

• Perpetual succession hence renewal is not applicable

• Perpetual succession hence renewal is not applicable

Perception of Business by the Public

• Regarded more trust worthy and credibility

• It is common with specific professions hence it is easily and strongly regarded more trust worthy and credibility

Funding Opportunities

• Avenue for equities from members including venture capital funding.
• Obtaining financial loans is relatively easier compared to other form of businesses.

• Obtaining loans from banks is only by mortgaging the personal assets of the partners.

Yearly Statutory Obligations

• Must appoint a company secretary within 6 months of incorporation.
• Must appoint an auditor within 3 months after incorporation, unless the company is exempt from audit requirements
• Annual returns must be filed.
• Statutory requirements for general meetings, directors, company secretary, share allotments must be complied with.

• Annual declaration of solvency/insolvency must be lodged by one of the managers stating whether the LLP is able or not able to pay its debts during the normal course of business.
• No statutory requirement for general meetings, directors, company secretary, share allotments etc.

Taxation

• Profits taxed at corporate tax rates

• Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation)

Taxation Form

• ECI & Form C or C-S

• Form P for Partnership & Form B for respective Partners

GST Implication

• GST obligation is at entity level based on own turnover

• Based on combined turnover of all partnership businesses with the same composition (structure) of partners

Perpetual Existence in Law

• A company has perpetual succession until wound up or struck off.

• The LLP has perpetual succession until wound up or struck off.

Transfer of Ownership

• Ownership can be transferred by sale and purchase of shares

• Partners can be changed

Closing the Business or Deregistration

• Winding Up – Voluntarily by members or creditors, compulsorily by the High Court
• Striking off

• Winding Up – Voluntarily by members or creditors, compulsorily by the High Court
• Striking off