S/N

o
1.

Comparison

General Partnership

Limited Partnership

Which has
more
formalities?

Least

Less

2.

Is it a
separate legal
entity?
Any limited
liability for
business
debts?
Who are the
agents of the
organisation?
(Examinable)

Not separate legal

entity.

Not separate legal

entity.

Partners have
unlimited liabilities

General partner
unlimited liability.
Limited partner liability
up to contribution.
General partner is an
agent.

3.

4.

Partners are agent of

firm and fellow
partners under S5 of
Partnership Act.
Exceptions: Third
party knew that
partner has no
authority or no
knowledge that he
was a partner.
Partners are jointly

Limited partner is not an

agent and not supposed
manage under S6 of LP
Act.
If limited partner starts
to manage, he will be a
general partner of the
particular contract.
Manage = Decision

Limited Liability
Partnership
Moderate

Separate legal entity. S4 of

LLP Act. Obligations belong
to the LLP
Members enjoy limited
liability up to contribution.

Members are agent of LLP

but not of each under
under S9 of LLP Act.
Acts of torts only guilty
partner and LLP liable
under S8(4) of LLP Act.

Company
Most, because it is governed by
Companies Act.
Public Companies have more
formalities.
Private Companies have less
and Exempt Private companies
(no more than 20 members and
all of its issued shares are
owned by natural persons)
least.
Limited by shares, trading
concerns, driven by profit.
Limited by guarantee. Non
trading concerns, mainly
education, charitable
organisation.
Separate legal entity. Saloman
V Saloman Co. Ltd
Shareholders enjoy limited
liabilities. Maximum liability up
to investment. Not liable for
companys debt.
Board of directors collectively.
Single director may be agent if
he as authority.
Company vicariously liable for
employees torts.

and severally liable

for acts of tort in the
course of business
under S10 and S12 of
Partnership Act.

5.

Who owns and

manages the
organization?

Partners

making, advice are not

management.
Under S6(3) of Limited
Partnership Act.
General partner same
position
GP and LP owns.
But only GP manages.

Members.

Board of directors manages the

company.

6.

Must a
Secretary or
Manager be
appointed?

No.

Manager if GP are
resident overseas under
S28 of LP Act.

Manager must be
appointed.

7.

Any
submissions of
reports to
ACRA?

No.

No.

Declaration of solvency.

8.

9.

10

11.

Shareholders own the company.

Income tax
(personal or
corporate)?
Does it enjoy
secrecy of its
financial
affairs?

Personal

Personal

Personal

Yes.

Yes.

Limited because of
declaration of solvency.

Are auditors
required to be
appointed?
ROI in what

No.

No.

No.

Profits

Profits

Profits

Shareholders can be director,

directors can be creditors, and
shareholders can be directors.
Secretary must be appointed
within 6 months of formation.
Public company must hire
professional secretary,
lawyers/secretary.
Annual returns.
-Audited accounts
-Balance sheet
Exempt private company enjoy
less formalities.
Corporate

No for public.
Exempt private enjoys secrecy.
(Less than 20 individuals, less
than 5m turnover)
Yes, within 3 months of
formation.
Dividends.

12.

form is this
received?
How is
dissolution
achieved?

Voluntary or
compulsory. Simple
process.

Voluntary or compulsory.

13.

How is the
organization
financed?

Partners

Partners

Complex.
Partners voluntary
Creditors Voluntary
In court as they follow
companies act.
Members?

14.

Are there any

statutory
duties/meetin
gs?

Yes, partners have

under S29 and S30 of
Partnership Act. No
meetings.

Yes, partners have under

S29 and S30 of
Partnership Act. No
meetings.

Yes, partners have under

S29 and S30 of Partnership
Act. No meetings.
Fiduciary Duties

Limited partners cannot

dissolve.

Complex, follow company act.

Equity.
Debt.
Public company can offer shares
to the public.
Directors have fiduciary duties.
To act in best interest of
companies, no conflict of
interest.

Annual General Meeting,

Extraordinary General Meeting,
Statutory meeting for public
companies.
15.
Is conversion
GP to LLP under S20
No conversion.
No provision.
Private to public.
to another
of LLP Act.
Public to private.
business form
Private to LLP under S21 of LLP
possible?
Act.
*LLP is a bit like general partnership, especially insofar as rights and duties of partners themselves concerned, insofar of the relationship of
the partners themselves concerned (differs mainly in liability of partners to T)
Exam Question:
Given the fact that LLP and companies have limited liability, why would you choose to set up a company?
Both LLP and company enjoy similar benefits. Both have limited liability. But companies can convert into a public company and list itself on
stock exchange to make public offer, LLP cannot, easier to raise funds. Companies have far more tax exemptions than LLP. But there is a
problem with companies. Being a shareholder does not mean that you are a director, but if you are a partner you can make decisions for
the partnership.
Choose the appropriate business form.
Comment on the accuracy of a statement.
Concept Questions:

1) Shareholders own the company. Board of directors manages the company under S157A of the Company Act. In private companies,
shareholders tend to be directors. In public companies, those who own the companies need not manage the company.
SG: AB Pte Ltd for private companies, AB Ltd for public companies
UK: AB Ltd for private companies, AB Plc for public companies.
Australia: Proprietary for private companies
unlimited companies are exceptions.
2) LLP are more similar to company as they are both separate legal entity and perpetual succession
GP in LLP own and manages the company
Shareholders in company does not necessarily manage.
3) No separate entity for both.
LP has Limited Partner who enjoys limited liability up to contribution.
4) Company and LLP as both governed by Company Act.
5) Sole Proprietorship, General Partnership under S9 of Partnership Act. GP in LP also liable for business debts.
6) General Partnership under S5 of Partnership Act. LLP under S9 of LP Act. Companies director if they have authority.
7) General Partnership under S10 and S12 of Partnership Act, firm and other partners liable.
8) Members committed a tort, LLP liable under S8(4). But in companies, individual shareholders and directors are not agents.
Discussion Questions:
1a) Partners: Peter and Paul. Paul is partner because of 20% profit. (Prima facie evidence of a partnership).
Under S5 of Partnership Act, every partner is an agent of firm and fellow partners. Both of them are agents of firm and each other.
Even though Paul has no authority, Printek Pte Ltd did not know of restrictions and was led to believe that Paul was a partner under S8 of
PA.
S5 exception does not apply.
Under S9, both of them are jointly liable for business debts.
1b) Paul commits a tort in the course of the firms usual business.
Under S10 and S12 of the Partnership act, both partners are jointly and severally liable Cress & Sprouts.
1ci) Paul is a director, so he is an agent if he has authority.
Signing on contract was out of his job scope which is editing and creating aspects of magazine.
Apparent authority not in issue due to question.
Suppose we consider apparent authority, was receptionist someone who had power to make that representation? She had no actual
authority, Pauls authority is doubtful. Could you argue usual authority by virtue of position?
As a result, no apparent/actual authority, unable to bind company to contract.

1cii) Company is a separate legal entity.

Peter is only liable up to the amount he invested.
Hence, Peter is not personally liable to Printek.
1d) S8(4) of LLP Act If partner commits tort while acting in course of LLPs business, LLP is liable together with the partner who commits
tort.
Paul committed tort of defamation in ordinary course of business, cannot sue peter for Pauls defamation as he is not Pauls agent.
Additional Questions:
1) Uncle: Avoid stupid fool and careless fool.
Uncle is partially correct. LLP is better than GP and LP.
2) Limited liabilities = Abel, Ben and Charlie want to limit their liabilities. LLP and company are separate legal entity from its
partners/members. GP and LP cannot satisfy.
Management: Abel and Charlie wish to manage LLP and company (as directors and shareholders) are both suitable. Ben does not wish to
manage, so LLP is not suitable.
Only company is suitable where Ben can be a shareholder, Abel can be both shareholder and director, Charlie only a director.
Unauthorised transactions/wrongdoings of others: As a director, one is not an agent of fellow directors. Hence, Abels wrongdoings or any
unauthorised decision will not cause Charlie to be liable.
Private limited company as <20 people. Fulfils all the requirements.

Key
features

Sole
proprietorsh
ip
One owner

Partnerships

Limited Liability
Partnership (LLP)

Limited Partnership
(LP)

Companies
(private)

Companies (public)

1. 2-20 partners
2. Carrying on of a
business
3. Common
objective of
generating profit

1. Identified by LLP
in its name
2. 2 infinity
partners
3. Perpetual
succession

1. Identified by LP in
its name
2. 2 infinity
partners
3. At least one
general partner, and
one limited partner
4. LP cannot take
part in management
of LP (downside), if
he takes part, he is
deemed as GP and
has unlimited
liability

1. Company is an incorporated business

organisation registered under Companies
Act
2. Owners are referred to as members
and invest in companys business
3. Most companies are divided into
shares and members are shareholders
holding shares in company
4. Shareholders have rights e.g. rights to
vote and rights to dividends
5. Creditors are not
shareholders/members, just a
lender/supplier on credit
6. Directors manage the company, and
are appointed by shareholders, and
directors may or may not be
shareholders
7. Corporate decisions do not need
approval of shareholders EXCEPT
fundamental changes e.g. changes to
M&A, changes affecting shareholders
rights
8. Must have secretary
9. Directors and secretary are regarded
as officers of company and have duties
to fulfil (notes)
10. Minimum 1 member
11. Perpetual succession of companies
12. Maximum 50
12. No maximum
members
members
13. Restrictions on
13. No restrictions
transfer of shares
14. Private, Pte,

Sdn, Sendirian
seen in name
Liability

Unlimited

1. Whose liability?

1. Whose liability?

1. Whose liability?

1. Whose liability?

Every partner
bears equal
liability, unless
prior partnership
agreement states
otherwise

LLP is a separate
legal entity, and
thus can own
property in own
name and can sue
and be sued in own
name, and LLPs
liabilities are its
own
LLP has perpetual
succession, change
in partners does
not affect
existence, rights,
liabilities of LLP

LP is NOT a separate
legal entity:
General partners
legal position is the
same as legal
position of partner in
a general
partnership,
meaning unlimited
liability, and thus
the GP is liable for
debts and
obligations of LP
Limited Partners
liability is capped at
the amount of
agreed investment
by LP, and is NOT
liable for debts and
obligations of LP
beyond his agreed
investment

Can sue and be sued in own name

Companys liabilities are its own and
shareholders/members and directors are
not liable for companys obligations
EXCEPT:
If companys business has been carried
on to defraud creditors, people
responsible can be personally liable for
debts incurred to these creditors, and if
person incurs debt on behalf of company
with no reasonable expectation of
settling debts, he can be held personally
liable for debts

2. Liability of
partners towards 3rd
party:

Relationship to 3rd
prty: S5 of
Partnership Act (if
partner acts with
authority firm
bound/any act
done by partner for
carrying on, on the
usual way of
business of firm will
bind firm,
regardless whether
partner had firms
authority to act,
UNLESS partner
acted without
authority AND 3rd
party knew partner
did not have
authority OR didnt
know he was
partner
3. Tortious Liability

S10: If partner
commits tort while
acting in ordinary

2. Liability of
partners/LLP

S9 in LLP Act:
Every partner of a
LLP is an agent of
LLP (NOT of his
other partners)
LLP will not be
bound by anything
done by partner IF
the partner had no
authority from LLP
to do that thing,
and third party
knows partner had
no authority, OR
does not know that
the person is a
partner
3. Tortious Liability

2. Whose rights?

Companys rights are its own and should

be enforced by company
EXCEPTIONS:
If majority of the shareholders committed
fraud on company and used majority
power to stop action by company against
them, minority shareholders can take
action in companys name against
majority
S216A of Companies Act Court can
allow member to bring action on behalf
of company IF it is in companys interest

*Company itself has unlimited

liability for own debts regardless
of whether is it a limited or
unlimited company
*There exists a fiduciary relationship
between a director and the company

course of business
of firm OR while
acting with
authority of his copartners, firm is
liable for tort
4. Change in
constitution of firm

A joins at time X
and is not liable for
debts owed prior to
X, unless agreed
otherwise
B leaves/retires at
time X, and is still
liable for debts
owed prior to X
(unless agreed
otherwise), and
would still be liable
towards 3rd party
after X UNLESS
third party had
notice of
retirement (s36(1)
of Partnership Act)
OR third party
never knew he was
a partner
5. Liability of nonpartner

General rule: nonpartner is not liable

for anything the
firm has done
Exception:
S14 of Partnership
Act: if non-partner

S8: If partner
commits tort while
acting in course of
LLPs business OR
with LLPs
authority, LLP is
liable for tort (other
partners not liable)
S8(2): Partner is
NOT liable for
tortious acts
committed by LLP
(unless he is the
one who
committed tort)
4. Change in
constitution of firm

S9 (3) of LLP Act:

where a person
ceases to be the
partner of LLP, the
person is regarded
to be as the
partner still, unless
the third party has
been notified about
the cessation of
this partner/notice
that the former
partner has ceased
to be a partner of
the LLP has been
delivered to the
Registrar

Ease of
formation

Easy, just
register

Ease of
maintenan
ce,
(Regulation
s)

Easy

Relative
ease of
raising

Hard

is represented as
partner to Third
party, who as a
result gives credit
to firm relying on
representation, it
makes the nonpartner liable as a
partner
Easy, just register

Moderate, register
under LLP Act, and
by 2 or more
persons associated
for carrying on
lawful business
with view to profit,
and there must be
at least one
manager ordinarily
resident in SG

Moderate
Must appoint
manager if all
general partners are
not ordinarily
resident in SG

Easy

Quite hard

Moderate

Hard

Quite easy

Moderate

Hard
1. Through process of registration with
ACRA (Accounting & Corporate
Regulatory Authority) and according to
Company Act
2. Relatively more time-consuming and
expensive compared to the rest
3. Must lodge companys memorandum
of association and articles of association
with ACRA
Memorandum of association sets out
companys key characteristics
Articles of association sets out internal
management of company
Hard
Hardest, more
Exempt companies regulations than
(not more than 20
private companies
members and none because public
of the shareholders companies can
is corporation) are
invite the public to
subjected to even
invest in them and
fewer regulations
thus it is necessary
to protect public
interest through
these stringent
regulations
Easy
Easy

funds
Law that
governs it

Ease of
dissolution

No law
specifically,
but need to
comply with
1. Business
Registration
Act
(meaning
need to
register)
Easiest, can
simply close
and cease
business,
only need to
notify
Registrar of
Business

1. Partnership Act

1. Limited Liability
Partnerships Act
(NOT Partnership
Act)

1. Limited
Partnership Act 2008
AND
2. Provisions of
Partnership Act
*if there is conflict,
LP > PA

1. Companies Act

Easy, dissolve
according to
agreement, if none
then according to
the provisions of
Partnership Act,
and if Partnership
is registered,
inform authorities

Moderate

GP must file notice

of cessation of
business

Depends on limited or unlimited

company!
Limited company: liability of members in
a limited company is limited to the
amount left UNPAID on their shares
(identified via limited, ltd, berhad, bhd)
Unlimited company: members have
unlimited obligation to contribute
towards discharge of companys debts

Can be involuntary
dissolution pg 253

1. Voluntary winding
up

(i) Partners
voluntary winding
up, and can repay
debts within 12
months, partners
have control
(ii) Creditors
voluntary winding
up, when LLP is
unable to repay
debts within 12
months, and
creditors will have
control
2. By court

Winding up petition
granted by court
Liquidator will have
to be appointed to
gather assets and
pay debts in
accordance to the
Fifth Schedule of

Dissolution of company:
Need to undergo the winding up process
where the liquidator sells off companys
assets and distributes proceeds to
creditors in repayment of debt owed to
these creditors, and the order of
repayment is set out in Companies Act,
and only with surplus then it is
distributed to members, and upon
dissolution, company ceases to exist pg
351 for bankrupt, page 362 for winding
up

Forms of winding up:

LLP Act, and the

partners are one of
the last priority

1. Voluntary winding up
(i) Members voluntary winding up:
Members make decision to wind up
company, company is solvent, and
members have control over the winding
up process and the appointment of the
liquidator
(ii) Creditors voluntary winding up:
Members make decision to wind up
company, company is NOT solvent and
creditors have control over the winding
up process and the appointment of
liquidator
2. Winding up by court
Winding up petition is made (possibly by
creditor, or person inside company) to
court and court grants petition
*LLP and companies have strict and troublesome regulations because they are separate legal entities and debts owned = the organisation
and not theirs and hence there is a need to have someone creditors can look to, to be fair to creditors.
*LLP is a bit like general partnership, especially insofar as rights and duties of partners themselves concerned, insofar of the relationship of
the partners themselves concerned (differs mainly in liability of partners to T)
*Unlimited companies are the rarest because most people would want to limit their members liabilities upon winding-up, they are often
used in situations where the benefits of incorporation (e.g. separate legal personality and perpetual succession) are desired, but limitation
of liability is prohibited.