New limited partnership fund regime in Hong Kong

The Limited Partnership Fund Bill which provides for registration of eligible funds as limited partnership funds (LPFs) in Hong Kong passed the third reading at the Legislative Council on 9 July 2020. The Limited Partnership Fund Ordinance (LPFO) will come into operation on 31 August 2020.

The enactment of the LPFO is a very welcome development, and is in line with the Hong Kong government’s aim to enhance the competitiveness of Hong Kong in becoming a preferred centre for international asset and wealth managers in Asia. The limited partnership regime outlined under the LPFO is in line with the common features of LPFs in other jurisdictions. The LPFO contains provisions which (i) allow flexibility in capital contributions and distribution of profits, (ii) allow the parties in a LPF to freely contract according to their commercial intention, (iii) provide for a simple registration process with the Registrar of Companies; and (iv) provide a straightforward and cost-efficient dissolution mechanism.

Fund managers, in particular those who have an office and a team based in Hong Kong, will now have a viable option to establish their funds in the form of limited partnership in Hong Kong as an alternative to other offshore jurisdictions such as Delaware and the Cayman Islands.

Further information on the main features of the LPFO is available in our previous publication “A new structure for PE funds in Hong Kong” dated 27 March 2020.