The Limited Partnership Fund Ordinance (Cap. 637) (LPFO) came into force in August 2020 to establish a legal framework for limited partnership funds in Hong Kong.

The Hong Kong Limited Partnership Fund (LPF) is an investment fund structured as a limited partnership, where investors are divided into two categories:

• General Partners – Responsible for managing the fund’s operations and personally liable for its debts and obligations.
• Limited Partners – Contribute capital but have limited liability, meaning they are not personally responsible for the fund’s obligations beyond their investment.
  
  
  

Key Features of a Hong Kong Limited Partnership Fund

The LPF framework offers significant flexibility and advantages, including:

• No regulatory approval required for registration.
• No minimum capital requirements for limited partners.
• No investment restrictions, allowing broad flexibility.
• Freedom of contract, enabling parties to structure agreements according to their needs.
• Safe harbour provisions, protecting limited partners from being deemed as taking part in fund management by merely exercising certain rights.
  
  
  

Registration and Formation Requirements

To establish a Limited Partnership Fund in Hong Kong, the following conditions must be met:

• The fund must be constituted by a partnership agreement.
• It must have a registered office in Hong Kong.
• It must be formed with at least one general partner and one limited partner.
  
  
  

Obligations of the General Partner

Under the LPFO, the general partner must ensure the appointment of:

• An investment manager – Responsible for day-to-day investment management of the fund. This role can be fulfilled by the general partner or a separate appointed entity.
• A local Hong Kong auditor – Independent of the general partner and the investment manager, ensuring compliance with auditing standards.

There is no obligation to appoint a custodian for fund assets. However, the general partner remains responsible for ensuring the proper supervision and safekeeping of assets.

Contractual Flexibility

The LPFO provides extensive flexibility in fund operations, allowing fund participants to define operational terms through contractual agreements. This ensures that the structure and management of the fund can be tailored to meet the specific needs of investors.

Safe Harbour Provisions

The LPFO includes safe harbour protections for individuals involved in certain activities within the fund, ensuring that limited partners do not lose their limited liability status. These activities include:

• Serving on a board or committee of the limited partnership fund.
• Discussing, advising, or approving actions taken by the general partner or investment manager.
• Calling, requesting, attending, or participating in partners’ meetings.
  
  
  

Regulatory Oversight and Registration Process

The Companies Registry is responsible for overseeing the registration and compliance of Limited Partnership Funds in Hong Kong.

To register a Limited Partnership Fund, an application must be submitted to the Companies Registry, which will process the application and issue a certificate of registration upon approval.

Conclusion

The Hong Kong Limited Partnership Fund offers a flexible and investor-friendly framework for private equity and venture capital investments. With no regulatory approval requirements, broad contractual freedoms, and safe harbour protections, it has become an attractive choice for fund managers and investors looking to operate within Hong Kong’s legal and financial ecosystem.