Is a LLP a suitable structure for a small business with silent partners?


I'm evaluating whether structuring my small cafe business as a company or a LLP would be better. I will be the manager of the business, running it on a day to day basis and I will have 1 or 2 silent partners / investors who will be investing in the startup cost but not involved in any management or operations.

I'm leaning towards registering as a LLP due to the lower cost, lower tax, simpler operations, and limited liability. I do have some concerns about some legal aspects of LLP that I'm not sure will be the best arrangements for silent partnerships:

  1. Each partner gets a vote - silent partners are not supposed to be involved in management decisions
  2. Individual partners can commit the partnership to formal business agreements without the consent of the other partners.
  3. I'm not sure how to determine equity - is there such a thing in an LLP since there's no stocks? What happens in the event of a partner resigning - how to determine buyout?

BTW I'm from Singapore, here is a reference on legalities of LLPs in my local context: Would really appreciate some advice if a LLP or company would be the best way to go for my situation. Thanks!

Partnerships Singapore

asked Nov 5 '13 at 14:12
11 points

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