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- Sole Proprietorship
- Partnership (General)
- Limited Partnership (LP)
- Limited Liability Partnership (LLP)
- Company
Sole Proprietorship:
Sole Proprietorship may be described as a business that is carried on by a person (which includes individuals or legal entities such as companies) on his, her or its own without the use of a separate and distinct business form.
Partnership (General):
A Partnership (also known as General Partnership) is formed where two or more persons carry on a business in common with a view to making profit. Generally, the maximum number of partners allowed in a partnership is 20.
The partners can either be individuals or bodies corporate. Should more than 20 persons wish to carry on business together, they will have to do so through a Company (see Section 5 below). This does not apply to partnerships formed solely or mainly for the purpose of carrying on any profession that is regulated by other legislation (eg law firms, accounting firms, medical practices). A business partnership is often legally referred to as a ‘firm’.
Limited Partnership (LP):
The Limited Partnership (‘LP’) was introduced in 2009. 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 Partnerships also apply to LPs subject to the provisions of the Limited Partnerships Act (Cap 163B).
Limited Partner: 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.
General Partner: 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.
Limited Liability Partnership (LLP):
A Limited Liability Partnership (LLP) is a business organisation comprising two or more persons associated for carrying on a lawful business with a view to profit that is registered as such under the Limited Liability Partnerships Act (Cap 163A). Despite its name, it is not treated as a partnership and general partnership law does not apply to LLPs.
A partnership where the individual partner’s own liability is generally limited. An LLP is formed by registration under the Limited Liability Partnerships Act. It must have a minimum of two partners. There is no limit on the number of partners that an LLP may have. The partners can either be individuals or corporations such as company or LLP. An LLP does not have shareholders or directors and is taxed like a partnership.
Company:
A Company is an entity that is registered under the Companies Act (Cap 50). It has its own legal personality that is distinct from its members and the persons who manage the company. Companies can therefore own property and sue or be sued in their own names. They are recognised as taxable entities in their own rights.
