How to Convert From LLP to Pte Ltd in Singapore?
There are many reasons why you might want to change your Singapore company registration from a sole proprietorship or limited liability partnership (LLP) to Pte Ltd. Let’s discuss some of these reasons before getting familiar with the process of converting from LLP to Pte Ltd.
Why Should You Convert LLP to Pte Ltd in Singapore?
- If your business is registered as an LLP company in Singapore, the law considers the owner and the business to be the same. It simply means that you will be legally and financially responsible for all the liabilities against the business.
- The companies registered as private corporations in Singapore enjoy a separate status of a business entity in the Companies Act. As a result, they are treated as separate from the business owners. Moreover, the company members have limited liability.
- There are several tax incentives and schemes available in Singapore that only apply to private limited companies. By converting your Singapore company registration to Pte Ltd, you can enjoy these tax schemes.
- LLPs have very limited funding-raising options compared to Pte Ltd. You can expect to have more funds when you are running a private company.
- Generally, LLPs have greater difficulty in attracting clients and customers from the industry, while private companies are often preferred by all kinds of clients.
Now that you have become familiar with the reasons why you should consider converting LLP to Pte Ltd in Singapore, you should also become familiar with this process. It can be done in the following four simple steps:
The very first step in converting an LLP to Pte Ltd is that the owner of the company has to write a letter in which he or she will show that there are no objections in converting the same business to a private limited company. This letter is formally and legally known as the No Objection Letter. You should mention the reason for converting the company registration and the reason behind keeping the business name.
The next step is to incorporate the private limited company. The fee for this procedure depends on your specific requirements. Generally, the cost of incorporating a private limited company in Singapore is anywhere between S$1,500 to S$2,500.
You will need a registered mailing address, a local resident acting as the director, and a company secretary within six months of incorporation.
You should remember that once you have established a Pte Ltd company, the business owner will have to close the LLP within three months of incorporation.
3. Asset Transfer
This can be a tricky part of converting an LLP to a Pte Ltd, so you might need the professional services of an accounting firm in Singapore for this procedure. It involves identifying the assets and liabilities that have to be transferred to your newly-formed Pte Ltd.
Moreover, further breakdown of the assets in terms of the amount of share capital is also considered during this procedure.
It is important to evaluate the values and current condition of a company’s assets and liabilities because a director’s injunction can have a massive impact on loans and non-interest-bearing loans.
It is highly recommended that you hire an accounting firm in Singapore that has professional and experienced accountants to deal with these matters.
Professional accountants will make sure that the entire process is handled in a reliable and efficient manner so that all of the calculations are being made correctly.
Generally, the following are some of the important things to consider during and after the transfer of assets:
- The net assets to be transferred to the private limited company.
- The bank accounts under the control of LLP must be closed down. Instead, the company secretary or the business owner will have to open new accounts. It is important to reflect the changes made in company registration on official documents to avoid legal issues at a later stage.
- If you have a rental agreement for your business, you will have to update the agreement and change the type of company to a private limited company. Moreover, you will be required to re-sign the remaining business contracts and service agreements.
- You might have to re-apply for licenses and permits, depending on their types.
Once you have incorporated the private limited company in Singapore, you must terminate your LLP within three months. For this purpose, you will have to submit a Notice of Cessation to ACRA and confirm the closure of your LLP.
In a Nutshell
By following these four steps, you should have no issue in converting your LLP to Pte Ltd in Singapore.
This process can become much easier if you rely on experts who have experience in dealing with company registrations and accounting firms in Singapore that can help you in managing the finances and asset transfer during this process. For more information, feel free to get in touch with us.