Starting a Practice

 

Law Corporations

 

 

 

 

Appendix 1

Part VIA Legal Profession Act

 

Appendix 2

Legal Profession (Law Corporation) Rules

 

Appendix 3

Application Form LLCF-A

Application Form LLCF-B

Application Form LLC2 Form

 

Appendix 4

Specimen Memorandum & Articles of Association

 

     

1. Introduction
     
1.1 Singapore lawyers have the option of providing legal services through law corporations in addition to sole proprietorships or partnerships with the passing of the Legal Profession (Amendment) Act on 5 May 2000.
1.2   Part VIA has been added to the Legal Profession Act ('the Act'). This Part in sections 81A to 81O sets out the relevant statutory provisions on the commencement to the winding up of a law corporation.
1.3   On 1 October 2000 the Legal Profession (Law Corporation) Rules ('the Rules') were passed by the Minister of Law under section 81N of the Act, to enable the Council to accept applications by lawyers to form a law corporation.

1.4   The Companies Act and other written law relevant to companies will apply to a law corporation subject to the Act and the Rules.
1.5   A law corporation has all the rights and is subject to the same obligations as a lawyer holding a practising certificate.
1.6   The transfer of business will have tax implications for your former law firm and proposed corporate entity. You are therefore advised to consider the tax issues before proceeding an application to form a law corporation.

 

2. Setting Up a Law Corporation

 

Approval of a law corporation
2.1 The Council must first approve of the incorporation of a law corporation to provide legal services.
2.2 In Appendices 1 and 2 the relevant sections of the Act and a copy of the Rules are attached.
2.3   The application form attached in Appendix 3 must be completed and submitted to the Council for an application for approval to form a law corporation and its name. The draft Memorandum and Articles of Association and the duly completed Memorandum of compliance of the proposed company must accompany the application.

2.4   Once the Council approves of the proposed company, the directors may proceed to register and incorporate the company under the Companies Act. Section 81B(4) of the Act refers.
2.5   A law corporation must also satisfy the provisions of the Companies Act. The Council will consider applications to incorporate a sole director/shareholder law corporation as our company law was amended to permit single director companies.

2.6   Grounds for refusal of an application to form a law corporation The Council may refuse an application by lawyers to form a law corporation if:
  2.6.1   All of the proposed directors do not comply with the terms of section 75C of the Act;
2.6.2   Any of the proposed directors are the subject of pending disciplinary proceedings under Part VII of the Act;
 
2.6.3   Any of the proposed directors have been found guilty of any professional misconduct under Part VII of the Act;

2.6.4   Any of the proposed directors have been refused a practising certificate under section 25A of the Act;

2.6.5   Any of the proposed directors have been convicted of a criminal offence involving fraud or dishonesty;

2.6.6   Any of the proposed directors have been suspended or struck off from practice as a lawyer in Singapore or any other jurisdiction;
2.6.7   Any of the proposed directors have been directors of a law corporation that had been wound up under section 81I of the Act;

2.6.8   Any of the proposed directors have been an undischarged bankrupt or made arrangements with their creditors; and
2.6.9   For any other reason the Council thinks it is in the public interest or the interest of the legal profession not to allow the law corporation to be formed.
     

 

3. Name of a Law Corporation
3.1 The application for approval of name of a law corporation must be submitted to the Accounting and Corporate Regulatory Authority ('ACRA') only after the Council has in principle approved the setting up of a law corporation.
3.2 ACRA and the Law Society will jointly co-ordinate the approval of the name of a law corporation.
3.3   Every law corporation must have the words 'Law Corporation' or the acronym 'LLC' as part of its name.

3.4   The Council may direct a law corporation to change its name if through inadvertence or otherwise the name approved is in contravention of section 81C(1) of the Act. A law corporation must within 6 weeks from the date of the direction or any longer period the Council may allow change its name.
3.5   The Council has ruled from 6 April 2001 that it will not approve a name of a law corporation if it includes the phrase 'partners' or 'partnership' in its name for example, Lim Partnership LLC.

3.6   Guidelines for approval of name/change of name
    The Council will not approve the name or change of name of a law corporation under section 81C(1) of the Act if:
  3.6.1   The name or initials is similar or likely to be confused with an existing name of a law firm, group law practice or other law corporation;

3.6.2   The name is misleading;
 
3.6.3   The name is inconsistent with any provisions of the Legal Profession (Publicity) Rules; and

3.6.4   The name in any other way detracts from the dignity of the legal profession eg the name proposed is offensive, sensational, false, in bad taste or ostentatious.

 

4. Memorandum and Articles of Association
4.1 A law corporation is a private exempt company under the Act and shall not be treated as a public company merely because it has more than 50 members. Section 81M(3) of the Act refers.
4.2 The Act and the Rules will prevail over any inconsistent provision of the Memorandum or Articles of Association. Section 81L of the Act refers. Memorandum of Association

4.3   The memorandum must make reference to section 81C (3) and (5) of the Act concerning the name of a law corporation.

4.4   The objects of the company must comply with section 81B (3) of the Act and the Schedule to the Rules ('the Schedule').
Articles of Association

4.5   The interpretation section of the Articles of Association must define the terms law corporation, the Legal Profession Act and solicitor.

4.6   Articles of Association must comply with the Act and the Rules on the persons who may become directors of the company, hold shares in the company and the transfer and disposition of the shares. Section 81H of the Act and paragraphs 2, 4, 6 and 7 of the Schedule refers.

4.7   Paragraph 7 of the Schedule requires the manner and terms of the transfer or disposal of shares to be set out in the Memorandum or Articles of Association. Under Paragraph 8 of the Schedule the manner and terms of any transfer or disposal of shares in the memorandum or articles is subject to the approval of the Council.

4.8   Paragraph 9 of the Schedule, enacts that the Memorandum or Articles of Association relating to matters specified in the Act or the Rules cannot be amended without the prior approval of the Council.
4.9   In Appendix 4 a specimen Memorandum and Articles of Association.

 

5. Board of Directors

 
5.1 Paragraph 2 of the Schedule to the Rules requires that only lawyers can be directors of a law corporation.
5.2   Paragraph 3 of the Schedule to the Rules requires that the office of the director shall become vacant if the lawyer ceases practice.

5.3 A qualification section to practise as a director in a law corporation is specified in section 75C(1) of the Act.

5.4   Section 75C (1) of the Act requires as follows:
  5.4.1   No lawyer admitted on or after 1 March 1997 may practise as a director of a law corporation unless:

    (a) he has 3 continuous years of practice or employment as a legal officer or 3 years out of 5 continuous years of practice in a law firm or law corporation or employment as a legal officer; and
 
    (b) he has successfully completed the legal practice management course run by the Council.

 

6. Professional Indemnity Insurance
6.1 Under the Legal Profession (Professional Indemnity) Rules a law corporation must have a separate mandatory cover arranged by the Council of S$2 million to cover itself in respect of civil liability.

6.2 Each director and employee of a law corporation must also under these Rules be insured in respect of civil liability for a total sum of S$2 million.

6.3   The relevant application form for professional indemnity cover can be downloaded from our website under the Practising Certificate icon.
6.4   The Law Society’s broker Lockton Companies (Singapore) Pte Ltd can be contacted at 36 Robinson Road, #16-01 City House, Singapore 068877, Tel: 6221 1288.

6.5   The relevant cover must be obtained before commencing business as a law corporation.

 

7. Professional Stationery and Description of Lawyers
7.1   Every invoice and official correspondence of a law corporation must bear the statement that it is incorporated with limited liability. Section 81C(4) of the Act refers.
7.2   Under rule 4 of the Professional Conduct Rules a lawyer must describe himself in connection with his profession in a manner approved by the Council.
7.3 The Council has approved the expression advocate and solicitor, lawyer, associate and legal consultant (if qualified), director, executive director, senior associate director, associate director, chief executive officer, manager and assistant manager.
7.4   If a law corporation decides to call its lawyers by any other description, then under rule 4 of the Professional Conduct Rules the Council’s prior approval must be obtained.

7.5 Under rule 6 of the Professional Conduct Rules a lawyer must comply with any directions of the Society regarding professional stationery, signs, signboards and nameplates calling cards of directors of a law corporation.

7.6   The Council has ruled from 12 January 2001 that the calling cards of directors of a law corporation must carry the description 'Advocate and Solicitor' after their designation.

 

8. Transfer of Business

 
8.1   Written notification of transfer of client files and moneys to a law corporation from a law firm must be given. It can also be given before the law corporation is to commence business.
8.2   Rule 6(1) of the Rules describe the matters the written notice to each client must specify. A client will be deemed to have consented to the transfer of the matter if no objection to the transfer is made within 14 days of the receipt of the notice. Rule 6 (3) of the Rules.
8.3   The Law Society advises law firms to inform each client of the terms of Rule 6(3) of the Rules in their written notice Rule 6 (3) of the Rules.

 

9. Practice in a Law Corporation

 
9.1   A lawyer can only practise in one Singapore law firm or law corporation. Rule 5 Professional Conduct Rules refers.
9.2   No lawyer can practise both as a partner of a law firm and employee of a law corporation at the same time.
9.3   A partnership or sole practice must cease to practise as a law firm before commencement of the law corporation.

 

10. Cessation of Practice of the Law Firm

 
10.1   The partners or proprietor can proceed to operate the former firm's client or office account for the purposes of winding down of the former law firm after commencing practice as a law corporation. Please refer to the section of our website on 'Cessation of Practice' for further particulars.

10.2   However, the Act recognises the situation of a lawyer either ceasing employment or directorship of a particular law corporation and wishes to continue to practise in another law corporation or law firm but is unable to dispose of his share ownership.

10.3   Under section 81H of the Act any person who holds shares in a law corporation may with the approval of the Council be a director or consultant or an employee of any law firm or practise as a lawyer on his own account.
10.4   The Council will exercise this discretion in the lawyer’s favour if he shows good reasons why the shares could not have been disposed or transferred before he commenced practice in another law firm or law corporation.

 

11. Goods and Services Tax (GST) - Relating to the Corporatisation of a Law Practice

 
11.1   The Inland Revenue Authority of Singapore ('IRAS') on 30 May 2001 advised the Law Society that law practices that remain GST-registered for the purpose of winding down of their business after it had been corporatised should inform the Comptroller of GST in writing (attention to Tax Payer Services Division) of this and the expected date of completion of the winding-down.

11.2   A law practice can remain GST registered until its dissolution provided the following conditions are complied with:
  11.2.1   separate accounts should be maintained for the GST-registered practice and the practice which has been corporated;

11.2.2   input tax should not be claimed by the GST-registered practice unless it is attributable to the making of taxable supplies;
  
11.2.3   upon dissolution of the practice or the completion of the winding down of the business, if it is earlier, the practice should apply for deregistration from GST.