In past days, private funds either take the form of unit trust structure or open-ended fund structure and therefore registrations in offshore jurisdictions such as Cayman Islands become one of the most common ways. However, the expensive costs and time-consuming procedures are unfavorable for private investment, hindering the growth of Hong Kong as an international asset and wealth management center. In view of this, the Hong Kong Government has introduced a new framework of private fund management since 31st August 2020 under the Limited Partnerships Fund Ordinance (Cap. 637) to modernize the previous Limited Partnership Ordinance (Cap. 37). The new ordinance allows the eligible private funds to be registered as limited partnerships with the aim of investment management and protection of investors’ benefits.
Features of Hong Kong Limited Partnership Funds (HKLPF)
- There is no separate legal entity for Hong Kong Limited Partnership Fund (HKLPF)
- There is a higher degree of freedom of contract for partners
- Minimum capital is not required
- There is an absence of statutory investment restrictions
Benefits of Hong Kong Limited Partnership Funds (HKLPF)
- It is to attract the set-up and registration of private investment funds in Hong Kong
- It is to encourage capital injection in corporations, particularly for those in the region of the Greater Bay Area
- The fixed application fee can help save the cost of establishing Limited Partnership Fun (LPF) in foreign regions
General Requirements of Hong Kong Limited Partnership Funds (HKLPF)
- Hong Kong Limited Partnership Fund (HKLPF) should be in line with the definition of “fund” in section 3 of the Bill
- It should be governed by a limited partnership agreement
- There should be at least one General Partner with unlimited liability to hold liable for all debts and liabilities of the fund
- There should be at least one Limited Partner with limited liability
- There should be an office in Hong Kong for the fund to ensure communications
Key Entities of Hong Kong Limited Partnership Funds (HKLPF)
- Investment manager
- Auditor
- Responsible persons
- Authorized representative (if applicable)
Procedures of Hong Kong Limited Partnership Funds (HKLPF) set up
- The General Partner and Limited Partner should make an application to the Registrar of Companies
- Prepare the form of “Application for Registration of Limited Partnership Fund” and a fee of HK$3,034
- The form and fees should be submitted by a registered law firm in Hong Kong or a solicitor who practices Hong Kong law in Hong Kong
Limited Partnership Funds Services Provided by CityLinkers
Before the LPF setup, CityLinkers would provide a tailor-made proposal to clients after considering the background and other information. In the wake of the discussion and mutual agreement between related parties and clients, CityLinkers would proceed to LPF setup and structuring in order to help clients to expand their business and achieve success.
- CityLinkers provide assistance in LPF setup
- CityLinkers help to review the documents, agreements and the procedures of the fund for LPF setup
- CityLinkers offer to coordinate applications with the authorities concerned
- CityLinkers support the application for the required license during LFP setup
- CityLinkers ensure LPF setup carefully complies with the related laws and ordinance
- CityLinkers help to deal with LPF administration
- CityLinkers ensure the compliance of fund with related laws and regulations
- CityLinkers provide the secretarial services regarding the fund
- CityLinkers offer the assistance in accounting and financing of the fund
- CityLinkers track and review the cash flow of the fund
