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Unincorporated Business Entity: PART 4

by admin on March 24, 2015 Comments Off

Today we will talk about the second common type of unincorporated business entity used in Singapore. It is the partnership.


The term partnership is commonly describe as any venture where there are more than one person involved. For example, 3 persons who started a food business may call themselves as “partners” when in fact their accountant have incorporated a company, in which they are shareholder to operate the business. This may be misleading in some ways.



At law, a partnership is the relationship which subsist between persons carrying on the business in common a view of a profit.


3 features of a partnership

  1. Participation of two or more persons
  2. Carrying on of a business and
  3. A common objective of generating profit.



A partnership is formed by contract. The contract may be oral or in writing. Oral partnership is not recommended. It is advisable to have a written partnership agreement executed by the partners. This agreement should state down the respective rights and obligations of the partners and any qualifications they wish to effect upon general provision of the partnership agreement.


No partnership can have more than 20 partners . With exception to professional partnership which are governed by specific legislation, such as accountancy. For example, the big 4 accounting firm.


Joint and several liability

In contract and debt, the partners are liable jointly. This means that the third party can only bring one legal action against the partners.

In the event of wrongly acts and omissions, the partners are liable jointly and severally. This mean that the third party can bring more than one legal action against the partner.



Partnership must file a notice advising the Registrar of Business that the firm has ceased it operation. There are countless reasons to the dissolution of a partnership. Essentially falls under 2 categories. Voluntary and Involuntary dissolution.


Voluntary Dissolution

Situation when

  1. Partnership expired after a specific project
  2. Any partner decided to quit
  3. Partnership agreement provides for any other reason for dissolution. Example will be voting deadlock.


Involuntary Dissolution

Not intended by the partners but by the process of law.

  1. One of the partner went bankrupt, die or his share in the partnership property is charged for his personal debts.
  2. Unlawful business of the partnership
  3. By a court decrees


Result of dissolution

Upon dissolution, all assets and liabilities in the partnership are split accordingly to the partnership agreement.



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