A sole proprietorship is a business that can be owned and controlled by an individual, a company or a limited liability partnership. There are no partners in the business. The legal status of a sole proprietorship can be defined as follows:
It is not a separate legal entity from the business owner
The business owner has unlimited liability (i.e. the business owner is personally liable for all the debts and losses of the sole proprietorship)
It can sue or be sued in the owner’s name
A partnership is a business owned by 2 to 20 partners.
The legal status of a partnership can be defined as follows:
It is not a separate legal entity from the business owners
The partners are personally liable for all the debts and losses of the partnership
It can sue or be sued in the partners’ names
Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) is a vehicle for doing business in Singapore. An LLP gives owners the flexibility of operating as a partnership while having a separate legal identity like a private limited company.
This means that the LLP is seen as a body corporate and has a legal personality separate from its partners. The LLP has perpetual succession, which means any change in the partners of an LLP will not affect its existence, rights or liabilities.
An LLP is capable of:
Suing and being sued in its name;
Acquiring and holding property in its name;
Having a common seal in its name and
Doing such other acts and things in its name, as bodies corporate may lawfully do and suffer.
The partners of the LLP will not be held personally liable for any business debts incurred by the LLP. A partner may, however, be held personally liable for claims from losses resulting from his own wrongful act or omission, but will not be held personally liable for such wrongful acts or omissions of any other partner of the LLP.
An LLP is required to keep accounting records, profit and loss accounts and balance sheets that will sufficiently explain the transactions and financial position of the LLP. In addition, the LLP must submit to the Registrar an annual declaration of solvency or insolvency (i.e. being able or unable to pay its debts respectively) which will be made available to the public.
A Limited Partnership (LP) is a vehicle for doing business in Singapore. It is a partnership consisting of a minimum of two partners, with at least one general partner and one limited partner. A LP does not have a separate legal entity from the partners, i.e. it cannot sue or be sued or own property in its own name.
An individual or a corporation may be a general partner or a limited partner of the LP. Appointing a local manager is not mandatory unless all the general partners are residing outside Singapore.
A general partner is responsible for the actions of the LP and is liable for all debts and obligations of the LP. A limited partner is not liable for debts and obligations of the LP beyond his agreed contribution, provided he does not take part in the management of the LP.
If there is no limited partner registered with ACRA, the LP registration will be suspended and the general partner will be deemed registered under the Business Names Registration Act. Once a new limited partner registers with ACRA, the LP registration will be restored and the registration under the Business Names Registration Act will cease.
During the registration of the LP, the lodger is required to indicate if the proposed LP falls under Regulation 12 of the LP Regulations. He is also required to indicate the name of the licensed fund manager in the application.
Regulation 12 of the Limited Partnership (LP) Regulations applies where:
An LP primarily establishes a fund for investment, and
A "licensed fund manager" (whether a general partner or a general partner's appointee) manages the fund.
A "licensed fund manager" is licensed under the Securities and Futures Act (Cap. 289) to carry on fund management business. He can also be exempted from being so licensed under Section 99 of that Act.
There are following 4 types of companies in Singapore and their basic features:
1.) Private Company Limited by Shares
2.) Exempt Private Company (EPC)
3.) Public Company Limited by Shares
4.) Public Company Limited by Guarantee
Private Company Limited by Shares
Has a maximum of 50 shareholders
Exempt Private Company (EPC)
is one which:
Has a maximum of 20 shareholders.
No corporation is a shareholder.
The Minister has deemed to be an EPC under the Companies Act.
Public Company Limited by Shares
May have more than 50 shareholders.
May raise capital by offering shares or debentures to the public.
Must register a prospectus with the Monetary Authority of Singapore (MAS) before making any public offers
Public Company Limited by Guarantee
Is usually formed to carry out non-profit making activities such as promoting arts, etc.
Is one which has members instead of shareholders. These members agree to pay a fixed sum in case the company is wound up.