The Limited Partnership Fund Ordinance (Cap. 637) (LPFO) came into force in August 2020.
The Hong Kong limited partnership fund is a type of investment fund structured as a limited partnership, where the investors are divided into two categories: general partners and limited partners. General partners manage the fund's operations and are personally liable for its debts and obligations, while limited partners provide capital but have limited liability.
Broadly, there is no regulatory approval required, no minimum capital requirements in relation to the limited partners, there are no restrictions on investments, there is flexibility in relation to freedom of contract and there are broad safe harbours.
The registration and formation requirements include:
- the limited partnership be constituted by the partnership agreement;
- has a registered office in Hong Kong; an
- is formed with at least one general partner and one limited partner.
Under the LPFO, the general partner has a duty to make a number of appointments including:
- An investment manager (who may be the general partner or another person) to carry out the day-to-day investment management functions of the limited partnership fund; and
- A local Hong Kong auditor who is independent of the general partner and the investment manager.
There is no duty to appoint a custodian. Nonetheless, it is the general partner's responsibility to make sure the limited partnership fund's assets are properly supervised.
The contractual freedoms are flexible under the LPFO. Regarding how the limited partnership fund operates, the fund often enjoys contractual independence.
In addition, the LPFO contains a number of safe harbours for those involved in certain activities of the limited partnership fund, such as:
- serving on a board or committee of the limited partnership fund;
- discussing with, advising or approving the general partner or investment manager of the limited partnership; and/or
- calling, requesting, attending or participating in a partners meeting.
The Companies Registry is responsible for overseeing Hong Kong's limited partnership fund regulation. To register a limited partnership fund, an application must be submitted to the Companies Registry.