Appendix 1

Copies of correspondence between Law Society and Inland Revenue Authority of Singapore

• Clarification of Tax Issues regarding Limited Liability Law Partnership

• GST on Limited Liability Law Partnership

 

Appendix 2

Application form for approval to set up Limited Liability Law Partnership and approval of name of Limited Liability Law Partnership & Declaration

 

Appendix 3

Limited Liability Partnerships Act 2005 - First Schedule

 

Appendix 4

Legal Profession (Limited Liability Law Partnership) Rules 2006

 

Appendix 5

Copy of letter from the Intellectual Property Office of Singapore to the Law Society

 

Appendix 6

PART VIB of the Legal Profession Act (Chapter 161)

 

Appendix 7

Copies of letters from the Supreme Court and Subordinate Courts to the Law Society

 

Appendix 8

Copies of letters from the Central Provident Fund Board to the Law Society and Singapore Land Authority's outline of notification procedures

 

Appendix 9

Accounting and Corporate Regulatory Authority's procedures for registration of a limited liability law partnership

 

1. Introduction

 

	1.1	The Limited Liability Partnerships Act 2005 ("LLPA 2005") came into force on 3 February 2005. The Legal Profession (Amendment) Act 2005 came into force on 4 December 2006 to provide for limited liability law partnerships by amending the Legal Profession Act (the "LPAct"). Part VIB of the LPAct concerning limited liability law partnerships is attached as Appendix 6 for your information.
	1.2	Pursuant to section 81ZB of the LPAct, the Minister made the Legal Profession (Limited Liability Law Partnership) Rules 2006 (the "Rules") which came into operation on 1 January 2007. The LPAct and the Rules enable the Council of the Law Society ("Council") to accept applications by solicitors to form limited liability law partnerships.
	1.3	The LLPA 2005 is applicable to a limited liability law partnership subject to the LPAct and the Rules. You are advised to familiarise yourselves as to the full implications of the LLPA 2005; in particular, Part II (nature of limited liability partnership), Part V (management & administration) and the default provisions set out in the First Schedule (applicable in the absence of agreement to the contrary).
	1.4	For the avoidance of doubt, all rules made pursuant to the LPAct, including but not limited to such rules relating to the keeping of accounts by solicitors shall apply, with the necessary modifications, to limited liability law partnerships.
	1.5	A limited liability law partnership is a separate legal entity with its own rights and liabilities distinct from those of the partners of the limited liability law partnership.
	1.6	For existing practices, conversion to a limited liability law partnership is governed by: (for existing practices which are firms) Section 20 of the LLPA 2005 and the Second Schedule thereof; or (for existing practices which are private companies) Section 21 of the LLPA 2005 and the Third Schedule thereof.
	1.7	The transfer of business will have tax implications for your former practice and the proposed limited liability law partnership. You are therefore advised to consider the tax issues before proceeding on an application to form a limited liability law partnership. Copies of the correspondence between the Law Society and the Inland Revenue Authority of Singapore (IRAS) relating to certain tax issues upon conversion of a law practice to a limited liability law partnership are attached as Appendix 1 for your information. Subject to satisfying certain conditions, it appears from the correspondence that IRAS is willing to grant concessions for continued recognition of unabsorbed capital allowances and losses and bad debt relief notwithstanding conversion of an existing partnership to a limited liability law partnership. Please refer to the letter from IRAS dated 19 December 2006 attached as Appendix 1 concerning the issue of Goods and Services Tax treatment of a law LLP upon conversion from a law partnership.
	1.8	Apart from tax issues, conversion may also require the new limited liability law partnership to give notifications of the change to various government bodies and may be subject to payment of fees if treated as a change of solicitors by them. Following representations by the Law Society, the procedures for registration notification to the various bodies and authorities have been clarified as follows: For purposes of filing notices of change of agent for matters relating to trade marks, registered designs and patents, refer to the letter from the Intellectual Property Office of Singapore (IPOS) dated 15 December 2006 attached as Appendix 5. However, paragraph 5 of IPOS's letter has been superseded by the amendments made to the First Schedule of the Patents Rules (the "Rules"), which came into operation on 1 April 2007, to require an IP agent to pay a fee and file Patents Form 23 in the event of its conversion to a limited liability law partnership. Upon receipt of the Form and fee, IPOS will proceed to update all the patent files to which the IP agent is responsible for; and For purposes of notifying the Supreme Court and/or the Subordinate Courts in the event of the conversion of a law firm to a law LLP, refer to the letters from the Supreme Court and the Subordinate Courts dated 5 February 2007 and 6 February 2007, attached as Appendix 7; and For purposes of notifying the Central Provident Fund Board (CPF Board) and the Singapore Land Authority (SLA) in the event of the conversion of a law practice to a law LLP, refer to the letters from the CPF Board dated 30 January 2007 and 14 February 2007 for the CPF Board's notification requirements and the SLA's outline of notification procedures dated 18 January 2007, both attached as Appendix 8.
	1.9	Members should give serious consideration to such issues prior to conversion and to take their own tax advice where necessary.

 

2. Setting up a limited liability law partnership

 

	Approval of a limited liability law partnership
	2.1	The Council must first approve the name and the setting up of a limited liability law partnership. Please refer to paragraphs 3 and 4 of these Guidelines for approval of name of limited liability law partnership. Such approval also applies in cases where it is desired to change an existing law firm or law corporation into a limited liability law partnership.
	2.2	The application form attached as Appendix 2 must be completed and submitted to the Council for an application for approval to form a limited liability law partnership and of its name.
	2.3	Once the Council approves of the proposed limited liability law partnership, the partners should then proceed to register it under the LLPA 2005. Section 81Q(3) of the LPAct refers.
	2.4	A limited liability law partnership must also satisfy the provisions of the LLPA 2005. In particular, it must be ensured that there are not less than 2 qualified persons who are partners and at least one manager.
	Grounds for refusal of an application to form a limited liability law partnership
	2.5	The Council may refuse an application by solicitors, including an application by those practising in any existing firm or law corporation, to form a limited liability law partnership if: Any of the proposed partners does not comply with the terms of section 75C of the LPAct; Any of the proposed partners is the subject of pending disciplinary proceedings under Part VII of the LPAct; Any of the proposed partners has been found guilty of any professional misconduct under Part VII of the LPAct; Any of the proposed partners has been refused a practising certificate under section 25A of the LPAct; Any of the proposed partners has been convicted of a criminal offence involving fraud or dishonesty; Any of the proposed partners has been suspended or struck off from practice as a lawyer in Singapore or any other jurisdiction; Any of the proposed partners has been a partner of a limited liability law partnership that had been wound up under section 81W of the LPAct; Any of the proposed partners has been an undischarged bankrupt or made arrangements with their creditors; and For any other reason the Council thinks it is in the public interest or the interest of the legal profession not to allow the limited liability law partnership to be formed.

 

3. Name of a limited liability law partnership

 

	3.1	The application for approval of name of a limited liability law partnership should be submitted to the Registry of Limited Liability Partnerships ("ROP") only after the Council has given its in principle approval to the name and the setting up of a limited liability law partnership. To minimize delay in the registration process, members may wish to apply first in the prescribed manner to the ROP for the reservation of a name of a limited liability law partnership (see section 19(2) & (3) of LLPA 2005) before submitting the reserved name to Council for its in principle approval. The Council will give its formal approval of the name of the limited liability law partnership after members have filed the relevant forms with ROP.
	3.2	The ROP and the Law Society will jointly co-ordinate the approval and registration of the name of a limited liability law partnership. For details of the procedure for registering a limited liability law partnership with ROP, please refer to the Accounting and Corporate Regulatory Authority's (ACRA) outline of registration procedures dated 19 March 2007 attached as Appendix 9.
	3.3	Every limited liability law partnership must have either the words "limited liability partnership" or the acronym "LLP" as part of its name.
	3.4	No limited liability law partnership may carry on business under an unregistered name (see Section 18 of the LLPA 2005). This prohibition applies both in cases where the name has never been registered with the ROP or where there is failure to notify the ROP of a change of particulars (see Sections 18 and 28 of the LLPA 2005 and 4.2 below).
	3.5	The Council may direct a limited liability law partnership to change its name if through inadvertence or otherwise the name approved is in contravention of section 19 of the LLPA 2005. A limited liability law partnership must within 6 weeks after the date of the direction or such longer period as the Council may allow change its name.

 

4. Guidelines for Approval of Name/Change of Name

 

	4.1	The Council will not approve the name or change of name of a limited liability law partnership under section 81R of the LPAct if: The name is misleading or detracts from the dignity of the legal profession; The name is so similar to that of an existing law corporation, limited liability law partnership, law firm or group practice as to be likely to be confused for it; or The name is inconsistent with any of the provisions of any rules on publicity made under section 71(1) of the LPAct.
	4.2	Members should note the following obligations to notify as to any change of particulars: to notify the Council within 7 days in respect of changes in particulars of partners, managers and contact details: see Rule 7 of the Rules; and to notify the ROP within 14 days of any change of the particulars registered with ROP. Failure to do so is an offence: see Section 28 of the LLPA 2005.

 

5. Limited Liability Law Partnership Agreement

 

	5.1	The LLPA 2005, the LPAct and the Rules will prevail over any inconsistent provision of the partnership agreement of a limited liability law partnership. Section 81Z and 81ZAof the LPAct refers.
	5.2	The mutual rights and duties of the partners of a limited liability law partnership, and the mutual rights and duties of a limited liability law partnership and its partners, shall be determined, subject to the terms of any limited liability law partnership agreement, by the provisions in the First Schedule of the LLPA 2005 (attached as Appendix 3) and the Rules (attached as Appendix 4).
	5.3	The limited liability law partnership agreement must make reference to section 81R (1) and (3) of the LPAct concerning the name of a limited liability law partnership.
	5.4	It should be noted that in the absence of a partnership agreement, the mutual rights and duties of a limited liability law partnership and its partners, shall be governed by reference to the default provisions set out in the First Schedule to the LLPA 2005. The partnership agreement ought also to make reference to the restriction on change of name of the limited liability law partnership: Section 81R(3) of the LPAct refers.

 

6. Partners

 

	6.1	Every limited liability law partnership must have at least two partners. If a limited liability law partnership carries on business with fewer than two partners for more than two years, personal liability may attach to the remaining partner. Section 22 of the LLPA 2005 refers.
	6.2	Only a solicitor who has in force a practising certificate may be a partner in a limited liability law partnership. Rule 5 of the Rules refers.

 

7. Manager of limited liability law partnership

 

	7.1	Every limited liability law partnership shall ensure that it has at least one manager who is a natural person of full age and capacity and who is ordinarily resident in Singapore.
	7.2	Every limited liability law partnership shall ensure that the particulars of every person who acts as manager of the limited liability law partnership and his consent to act as such are lodged with the ROP in such medium and form as the ROP may determine. Section 23 of the LLPA 2005 refers.
	7.3	The appointment and qualifying criteria for the Manager as set out in the LLPA 2005 must be strictly observed and the necessary declarations made in the Form attached at Appendix 2.

8. Professional Indemnity Insurance

 

	8.1	Under the amended Rule 4 of the Legal Profession (Professional Indemnity Insurance) Rules, a limited liability law partnership must have a separate mandatory cover arranged by the Council of S$2 million to cover itself in respect of civil liability. Please refer to paragraph 5 of the Legal Profession (Professional Indemnity Insurance)(Amendment) Rules 2006.
	8.2	The application form for professional indemnity insurance cover shall be submitted after the grant of in principle approval to form a limited liability law partnership, and shall be in the relevant form provided by the Council.
	8.3	The relevant insurance cover must be obtained before commencing business as a limited liability law partnership.

9. Professional stationery and description of lawyers

 

	9.1	Every invoice and official correspondence of a limited liability law partnership must bear the statement that it is incorporated with limited liability. Section 81R (2) of the LPAct refers.
	9.2	Under Rule 4 of the Legal Profession (Professional Conduct) Rules, a solicitor must describe himself in connection with his profession in a manner approved by the Council.

10. Transfer of business

 

	10.1	Notwithstanding the conversion provisions in the Second Schedule (conversion from a firm) and Third Schedule (conversion from a private company) of the LLPA 2005, where the business of an existing practice is transferred to a limited liability law partnership, Rule 6 of the Rules requires that the limited liability law partnership notify every client of the existing practice within 7 days of the transfer. Clients are deemed to have consented to the transfer if they do not notify to the contrary within 14 days of receipt of such notice.
	10.2	With effect from the date of transfer of the business of an existing practice to a limited liability law partnership: the limited liability law partnership shall replace the law firm or law corporation as the provider of legal services to the client; the possession of any documents held by the law firm or law corporation for or on behalf of that client shall be transferred to the limited liability law partnership to be held for or on behalf of that client; and any money or funds held by the law firm or law corporation for or on account of that client shall be transferred to the limited liability law partnership to be held for or on account of that client.

11. Practice in a limited liability law partnership

 

	11.1	A solicitor can only practice as a consultant or a member of one Singapore law firm or law corporation or limited liability law partnership. Please refer to Rule 5 of the Legal Profession (Professional Conduct) Rules.
	11.2	No solicitor can practise in a limited liability law partnership and a law corporation or a law firm at the same time.

12. Cessation of practice of the limited liability law partnership

 

	12.1	The limited liability law partnership may be wound up either voluntarily by the partners or by the High Court. The provisions of the Fifth Schedule of the LLPA 2005 shall apply to the winding up of a limited liability law partnership in either of these modes.
	12.2	The Council may cancel the registration of a limited liability law partnership which has ceased providing legal services or which has been wound up (Section 81Y(3) of the LPAct refers).

 

For further information on these Guidelines or the formation of a Limited Liability Law Partnership, please contact:

 

Compliance Department
The Law Society of Singapore
39 South Bridge Road
Singapore 058673

 

E-mail: compliance@lawsoc.org.sg

 

Tel: Allison Loo (6530 0217)