Limited Partnership Fund Hong Kong: LPFs Explained
- Anna Lau
- Jul 13, 2022
- 3 min read
Updated: Apr 17
What Is a Limited Partnership Fund (LPF)?
A Limited Partnership Fund (“LPF”) is a type of fund that has the structure of a limited partnership and manages assets for the benefit of its investors. In Hong Kong, LPFs are regulated by the Limited Partnership Fund Ordinance (Cap. 637) (“LPFO”). Given the opt‑in nature of the LPF regime, it is not compulsory to register the LPF.
''Hong Kong distinguishes itself from other established jurisdictions by allowing LPs to engage in 'safe harbor' operations under the LPFO.''
Structure of the Fund Under the Limited Partnership Fund Hong Kong Regime
Under this mechanism, two types of partners are involved: general partners (“GPs”) and limited partners (“LPs”).
Each LPF must have one GP responsible for overseeing the fund’s assets. GPs are responsible for the day‑to‑day operation and management of the fund, including:
Ensuring proper custody of assets
Appointing an independent auditor
Appointing a responsible person to oversee anti‑money laundering compliance
Engaging a law firm or lawyer in Hong Kong to assist with registration
LPs are entitled to a share of the fund’s profits but are not involved in daily management. Their liability is limited to their capital contribution.
Hong Kong allows LPs to engage in “safe harbor” activities, such as advising the GP or participating in partner meetings, without losing limited liability. Exceeding safe harbor activities may expose LPs to additional liability.
All relevant procedures are governed by the LPFO and the Partnership Ordinance (Cap. 38) (“PO”). An LPF requires a written Limited Partnership Agreement (“LPA”) and a registered office in Hong Kong.
''...there is no minimum capital requirement for each partner and no need for approval from the Securities and Futures Commission ("SFC")...''
Pros and Cons of a Limited Partnership Fund
The limited partnership fund Hong Kong regime offers significant flexibility in drafting the LPA, including partner rights, investment scope, transfer of interests, and custodial arrangements.
Unlike OFCs, LPFs are not restricted from engaging in general commercial or industrial activities.
From a cost perspective, Hong Kong’s LPF regime is more economical than many offshore jurisdictions. There is no minimum capital requirement, no SFC approval, and the registration fee is approximately HKD 3,000, compared with substantially higher costs elsewhere.
From a tax perspective, an LPF may qualify for exemption from profits tax under the Unified Profits Tax Exemption (UFE) if statutory conditions are met. Legal advice is recommended before establishment.
How Ravenscroft & Schmierer Can Help?
The limited partnership fund Hong Kong framework offers flexibility but requires careful legal and tax planning. Ravenscroft & Schmierer advises fund managers and investors on LPF structuring, registration, compliance under the LPFO, and tax considerations including the UFE.
If you are considering establishing an LPF in Hong Kong, contact us to discuss your circumstances and available options.
FAQ: Limited Partnership Funds in Hong Kong
What is a Limited Partnership Fund?
A Limited Partnership Fund is a private fund structure using a limited partnership format regulated under the Limited Partnership Fund Ordinance (Cap. 637) in Hong Kong.
Is registration of an LPF mandatory?
Yes. A fund must be registered under the Limited Partnership Fund Ordinance in order to operate as a Limited Partnership Fund in Hong Kong. While the LPF regime itself is opt‑in, registration is mandatory once that structure is chosen.
Who manages a Limited Partnership Fund?
A Limited Partnership Fund is managed by its general partner, who is responsible for the day‑to‑day operation and management of the fund.
Are limited partners liable for the fund’s debts?
Limited partners are liable only up to the amount of their capital contribution, provided they remain within the safe harbor activities permitted under the LPFO.
How can Ravenscroft & Schmierer assist with LPF setup?
Ravenscroft & Schmierer advises on LPF structuring, registration, and compliance under the Limited Partnership Fund Ordinance.
Does Ravenscroft & Schmierer advise on LPF tax exemptions?
Yes. We advise on Unified Profits Tax Exemption eligibility and related tax structuring considerations.
Can Ravenscroft & Schmierer provide ongoing compliance support?
Yes. We provide ongoing governance, regulatory, and compliance support for Limited Partnership Funds in Hong Kong.
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
For specific advice about your situation, please contact:
Partner
+852 2388 3899
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