A timely recap on re-domiciliation for limited partnership funds (LPFs)

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Authored by: Fiona Fong

Almost three years on since the LPF re-domiciliation regime was rolled out in 2021, we have seen growing interest among asset managers in re-domiciliating foreign funds to Hong Kong where they have bulk of economic substance, thanks to the introduction of the unified funds tax exemption regime and tax concessions for carried interest in recent years coupled with the recognition of ownership interest in LPF as permissible investment assets under the new Capital Investment Entrant Scheme.

The following is a much-needed recap on what you need to know before “moving” your investment funds to Hong Kong.

Eligibility requirements

Foreign funds have to meet the same eligibility requirements as a new LPF registrant under the Limited Partnership Fund Ordinance (Ordinance) to be eligible to be registered as an LPF. The fund must be constituted by a limited partnership agreement, and has one general partner (GP) and at least one limited partner who are duly qualified under the Ordinance. The fund’s name must be in English or Chinese or both, containing the words “Limited Partnership Fund” or “LPF” or the equivalent Chinese characters at the end. The fund must maintain a registered office in Hong Kong. It must not be set up for an unlawful purpose. Partners in the fund must not all be corporations in the same group of companies.

The GP must select for the LPF an investment manager for carrying out the day-to-day investment management functions of the fund, and an authorised representative for carrying out measures relating to customer due diligence and record-keeping of the fund. The GP should observe eligibility requirements applicable to these roles in the Ordinance. Particularly in relation to the appointment of the investment manager, the GP should consider any licensing implications pursuant to the Securities and Futures Ordinance.

In addition, the GP must be able to confirm that it has obtained or waived any consent or approval for the LPF registration in Hong Kong and the deregistration in its place of establishment pursuant to any existing contractual obligations on the fund, as well as confirming that the deregistration must not be prohibited under the law of its place of establishment or under the existing partnership agreement.

From overseas limited partnerships to LPFs

We see investor communication as the critical first step in re-domiciliation. A change of fund domicile is likely considered material. It is good practice for a fund manager to make adequate disclosure to fund investors of such material change, including benefits of Hong Kong as the fund’s new domicile and key differences on investors’ rights between Hong Kong and the fund’s place of establishment.

Applications for re-domiciliation is administered by the Companies Registry (CR). Relevant forms, together with applicable fees (including registration fee, non-refundable CR lodgement fee and business registration fee and levy), must be submitted by a Hong Kong firm or a solicitor on behalf of the fund’s general partner. If an application is successful, the CR will issue a Certificate of Registration and a Business Registration Certificate simultaneously within 4 working days.

Re-domiciliation preserves the continuity of a fund after it registers as an LPF in Hong Kong, without creating any new entities. Contracts made or resolutions passed by the fund will not be affected, and nor any of the fund’s property, rights, obligations or liabilities.

To complete the re-domiciliation process, the fund manager should arrange the fund to be deregistered in its place of establishment within 60 days after the LPF registration date. An LPF which retains dual registration in Hong Kong and in its place of establishment risks being struck off by the CR.

Key Contacts

Fiona Fong

Partner | Financial Services

Email or call +852 2826 5316