Government Accepts Recommendations On Limited Liability Partnerships05 Apr 2004
The Government has accepted nearly all the recommendations of the Study Team on Limited Liability Partnerships ("LLPs"). The study team, comprising private and public sector participants, was set up in November 2002 following the recommendation of the Company Legislation and regulatory Framework Committee (CLRFC) that legislation be enacted to introduce LLPs and limited partnerships in Singapore. Please refer to Annex A for the background on the study team and Annex B for the letter from the Co-Chairmen.
Recommendations on LLPs
2 Following a public consultation in June 2003, the study teammade a number of recommendations in its final report submitted to theMinistry of Finance (please see Annex C), covering areas such as legal structure and registration requirements, disclosure and reporting requirements, liability of partners of a LLP and dissolution requirements of LLPs. The key recommendations are highlighted below.
Recommendation One - Legal structure and information required for registration
3 The team recommends that a LLP should be a separate legal entity from its partners that comes into existence upon its registration with the Registrar of LLPs. The LLP should have unlimited legal capacity to conduct business and have perpetual succession. The LLP should be required to appoint at least one designated compliance officer (DCO) who will be responsible for all regulatory filings and submissions. The DCO should be a natural person and locally resident in Singapore, but he need not be a partner of the LLP. The Government has accepted this recommendation.
Recommendation Four - No upper limit to total number of partners
4 The team recommends that the law should not prescribe any upper limit on the total number of partners in a LLP. During public consultation, the team had suggested that LLPs be restricted to 20 partners, with exceptions for professional LLPs, and that the Minister should be empowered to increase the limit. Most respondents commented that the 20-partner limit was too restrictive and prevented the future expansion of the business. The Government has accepted the team's recommendation to remove the upper limit to the total number of partners in a LLP. This would facilitate the growth of the LLP and enable the LLP to secure additional partners and funds whenever new business opportunities arise.
Recommendation Five - One partner LLP
5 During public consultation, the team sought views on whether a LLP should be statutorily required to have at least two partners. The responses were mixed. Some respondents commented that allowing a one-partner LLP will increase business flexibility and avoid the costs necessarily incurred in winding up the LLP when the number of partners falls below two. However, others felt that a one-partner LLP is a legal misnomer and that such a practice is not in line with international norms. Having carefully considered these views, the team recommends that a LLP should have at least two partners. In the event that there are less than two partners, the sole remaining partner should be given a grace period of two years to either find a new partner or to commence winding up, failing which the sole remaining partner should be liable for all the liabilities and obligations of the LLP incurred after the end of the grace period.The team believes it should not be too difficult for the remaining partner to secure a new partner within an adequate period if there is a viable business. The Government agrees with the team's recommendation.
Recommendation Eight - Taxation fra
Recommendation Ten - Accounting records and audit
9 The team recommends that a LLP, like a general partnership, should not be required to prepare and/or file its financial statements or to have its accounts audited. The LLP should however be.
Recommendation Sixteen - Voluntary dissolution
12 The team recommends that a LLP should be allowed to voluntarily wind up and the LLP Act should provide for the winding ups of LLPs, modeled after the existing winding up regime for companies.
MINISTRY OF FINANCE