Limited Liability Partnership as a Hybrid Business Organization
The limited liability partnership; A hybrid of two different forms of business organizations – the partnership and the company.
The Limited Liability Partnership (LLP) was introduced as a new business entity in Singapore in 2005. Its definition under S14 of the Limited Liability Partnership Act (LLPA) shares a resemblance to S1 of the Partnership Act (PA): it comprises of two or more persons carrying on a lawful business in view of profit upon registration with the Accounting and Corporate Regulatory Authority (ACRA). Partners may be individuals, other LLPs or companies registered under the LLP agreement and thus bounded by the laws governing the act. As a hybrid business entity, the LLP combines the limited liability features of companies with the operational flexibility of partnerships. The LLP is a corporate body recognized as a separate legal entity from its members S4(1) LLPA. This was previously existent only in companies locally. Hence, it can enter into legal contracts, own property, sue and be sued in its own name S5(1) LLPA. As such, it enjoys perpetual succession in S4(2) LLPA whereby any changes such as the resignation, death or bankruptcy of the members do not affect its existence, rights or liabilities S4(3) LLPA, thus being similar to S19(5) of Companies Act (CA) and in opposed to S33 PA whereby the partnership is dissolved due to such changes. Likewise to public companies, LLPs can have unlimited members but it must consist of at least two partners (S22 LLPA). Additionally, LLP managers share similar qualification and disqualification criteria to company directors as stated in S23 and S34 of LLPA and S145, S149, S149A and 154 of CA. Under S9(1) LLPA, just as in partnerships, every member of the LLP is recognized by law as its agents. Hence their actions within their scope of authority bind the LLP. However in S9(2) LLPA, it does not shields individual members from legal liability resulting from any personal acts not done on behalf of the LLP.
The Limited Liability Partnership (LLP) was introduced as a new business entity in Singapore in 2005. Its definition under S14 of the Limited Liability Partnership Act (LLPA) shares a resemblance to S1 of the Partnership Act (PA): it comprises of two or more persons carrying on a lawful business in view of profit upon registration with the Accounting and Corporate Regulatory Authority (ACRA). Partners may be individuals, other LLPs or companies registered under the LLP agreement and thus bounded by the laws governing the act. As a hybrid business entity, the LLP combines the limited liability features of companies with the operational flexibility of partnerships. The LLP is a corporate body recognized as a separate legal entity from its members S4(1) LLPA. This was previously existent only in companies locally. Hence, it can enter into legal contracts, own property, sue and be sued in its own name S5(1) LLPA. As such, it enjoys perpetual succession in S4(2) LLPA whereby any changes such as the resignation, death or bankruptcy of the members do not affect its existence, rights or liabilities S4(3) LLPA, thus being similar to S19(5) of Companies Act (CA) and in opposed to S33 PA whereby the partnership is dissolved due to such changes. Likewise to public companies, LLPs can have unlimited members but it must consist of at least two partners (S22 LLPA). Additionally, LLP managers share similar qualification and disqualification criteria to company directors as stated in S23 and S34 of LLPA and S145, S149, S149A and 154 of CA. Under S9(1) LLPA, just as in partnerships, every member of the LLP is recognized by law as its agents. Hence their actions within their scope of authority bind the LLP. However in S9(2) LLPA, it does not shields individual members from legal liability resulting from any personal acts not done on behalf of the LLP.
References: Websites • • • • • • • • http://statutes.agc.gov.sg/ http://www.iras.gov.sg/irashome/default.aspx http://www.acra.gov.sg/Services/LLP/ http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId= 1073789611 http://www.aepronet.org/pn/vol12-no1.html http://www.singaporelaw.sg/content/BA.html#section4 http://www.business.gov.sg/EN/StartingUp/RegisterYourBusiness/ChooseABusin essStructure/regbiz_type_llp.htm http://www.rikvin.com/Partnership-in-Singapore.html Texts • Singapore Business Law 4th Edition by Benny S Tabalujan and Valerie Du ToitLow