FORMS OF BUSINESS ORGANISATIONS

Limited Liability Company

A limited liability company is the most common form of business organisation in Singapore. A company, which may be either private or public, may be limited by shares or by guarantee. To be considered private, a company must meet the following requirements:

• Restrict the right to transfer its shares;
• Not have more than 50 shareholders; and
• Prohibit public subscription for its shares or debentures.

A private company is not permitted to invite the public to deposit money with it.

Certain private companies are exempt from specified statutory regulations, such as the requirement to file statutory accounts, the restriction on loans to directors and audit exemption. A private company may be classified as an exempt private company if either of the following applies:

• Its shareholders is not more than 20,
• and no beneficial interest in its shares is held directly or indirectly by a corporation; or

Sole Proprietorship and Partnership

Most businesses organisation may be carried on in the form of a sole proprietorship or a partnership. All sole proprietorships and partnerships must be registered under the Business Registration Act, 1973. Changes in partnership particulars require notification to ACRA. 

In a partnership, the partners are jointly liable for partnership debts and obligations. The liability of the partners to settle the partnership debts and obligations is unlimited and may not be limited.  In order to avoid possible disputes, it is preferable that a partnership agreement is drawn up.

Limited Partnership

From 4 May 2009, Limited Partnership (LP) is another business organisation 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. An LP does not have a separate legal entity from the partners.

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 an 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 Registration Act. Once a new limited partner registers with ACRA, the LP registration will be restored and the registration under the Business Registration Act will cease.

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