Hong Kong’s Legislative Council passed thelong-awaited Limited Partnership Fund Bill 9 July 2020, with the LimitedPartnership Fund Ordinance (“LPFO”)set to take effect 31 August 2020.

Why is this significant? Because priorto the LPFO, there is no suitable investment vehicle for establishing a limitedpartnership for private equity (“PE”)funds, which is a common structure globally for institutional investors. Thisis one key reason why PE funds in the region have always been domiciled in theCayman Islands.

It is thus no overstatement that the LPFOenhances Hong Kong’s chance of being Asia’s premier PE funds hub, particularlyas the city is also proposing a tax concession for carried interest issued byPE funds.

Regional rivalry

Not surprisingly, Hong Kong’s regional rival in thefinancial services stakes, Singapore, has also upped its PE game.

Enter its Variable Capital Company (“VCC”) platform, launched 15 January2020 to offer more operational flexibility when structuring PE funds. The VCC appears to havegathered much traction and differs from Hong Kong’s open-ended fund company (“OFC”) in that it can be used by PE fundmanagers.

Even before the VCC, Singapore’s LimitedPartnerships Act was revised in 2010 to cater to investment funds, though PEfund managers there continued to favour the Cayman Islands’ exempted limitedpartnership regime for reasons of familiarity.

This typically means using a master-feederfund structure, under which a Singapore-incorporated feeder fund is owned by aCayman Islands limited partnership that acts as the pooling master fund.  By domiciling the fund entity in Singapore,the fund is thus able to benefit from Singapore’s extensive double tax treatynetwork. The VCC has taken it a step further as Singapore targets PE investments.

Hong Kong vs the Incumbent

Notwithstanding regional developments, arising number of fund managers in Hong Kong have asked about the LPFO and if itmight finally be time to domicile their funds onshore in the FragrantHarbour.

The table below goes some way to answer that,as we delve into a comparison between Hong Kong’s LPFO regime and the one inthe Cayman Islands that has been the default pick in the past two decades formany of the world’s fund managers.

While time will tell if significant actionshifts to these shores, there is little doubt Hong Kong is headed in the rightdirection. With China developing its southern Greater Bay Area - to integrateand fully realize the potential of a megalopolis of nine cities and the twospecial administrative regions of Macau and Hong Kong – the LPFO regime arrivesat an opportune moment as investors look to raise funds from and/or to investin the region.

Hong Kong


Registered Office

A Limited Partnership Fund (“LPF”) must have a registered office in Hong Kong.

An Exempted Limited Partnership (“ELP”) registered in the Cayman Islands must have a registered office in the Cayman Islands. If the general partner (“GP”) is a foreign registered company, or a foreign registered partnership, it will also require corporate administration support.

Legal Personality

Does not have separate legal personality

Does not have separate legal personality


Must have one GP and at least one LP

Must have at least one GP and one LP


The GP bears the ultimate responsibility for the management and control of the LPF.

The GP is responsible for the management of the ELP.

Investment Management

Must appoint an investment manager (can be the GP)

No such requirement


Must appoint an independent auditor

Must appoint a Cayman Islands Monetary Authority approved auditor


Duty to ensure proper custody of assets

The assets of the ELP are held or deemed to be held by the GP on statutory trust as an asset of the ELP.

Liabilities of the GP and LP

In the event that the assets of the LPF are inadequate to satisfy the claims of its creditors, the GP will be liable for all debts and obligations of the LPF.

The LPs liability will generally be limited to the amount of the partner’s agreed contribution, except as may be provided by the limited partnership agreement (“LPA”) (provided they do not take part in the management of the LPF).

In the event that the assets of the ELP are inadequate to satisfy the claims of its creditors, the GP will be liable for all debts and obligations of the ELP.

The LPs will generally not be liable for the debts and obligations of the ELP except as may be provided by the LPA (provided they do not take part in the conduct of the business of the ELP).

Annual Return

The GP must file a specified annual return form with the Registrar of Companies.

The ELP must file with the Registrar of the Exempted Limited Partnership an annual return signed by or on behalf of a GP.

AML Officers

The GP must appoint a “responsible person” to carry out anti-money-laundering / counter-financing of terrorism functions for the LPF.

The GP must appoint natural persons as AML compliance officer (AMLCO), money laundering reporting officer (MLRO) and deputy money laundering reporting officer (DMLRO).

Registers (confidentiality)

The name of the LPF, the GP and the investment manager or the authorised representative will be in the public register that is available for public inspection, but not information about the LP.

The Registrar maintains a record of each limited partnership and registered ELP and all statements filed in relation to the ELP. Only limited information is publicly available on payment of a fee.

Migration and Re-domiciliation

An existing partnership established under the existing LPO can be registered as an LPF, subject to meeting the relevant requirements.

The LPFO however does not provide a mechanism for limited partnership funds established in other jurisdictions to re-domicile to Hong Kong.

An existing partnership established in any other jurisdiction may apply to be registered as an ELP.

ELPs are also able to deregister and transfer out of the Cayman Islands into another jurisdiction under processes set out in the ELP Law.


An LPF may be dissolved in accordance with the fund's LPA without the need of a court order, though court-ordered dissolution is still available under certain prescribed circumstances. 

An ELP shall be voluntarily wound up according to the LPA, and unless otherwise specified in the LPA, the provisions of Part V of the Companies Law of the Cayman Islands dealing with liquidations and the Company Winding Up Rules shall be deemed to apply to the winding up and dissolution of an ELP.

Get in touch

Penelope Shen
T: +852 3166 6936
E: [email protected]
Office: Hong Kong

Jet Tang
T: +852 3166 6937
E: [email protected]
Office: Hong Kong