The limited partnership fund regime is aimed at attracting private equity, real estate, and venture capital funds to set up and operate in Hong Kong.
Hong Kong’s Legislative Council on Thursday (9 July) passed the new Limited Partnership Fund Bill, establishing a new regime for investment funds to be registered in Hong Kong in the form of limited partnerships.
The Limited Partnership Fund Bill was introduced in March, to provide an alternative investment vehicle for private fund managers raising funds or investing in Asia Pacific, and requiring a regionally domiciled fund vehicle.
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The limited partnership fund regime is an opt-in registration scheme administered by the Companies Registry. It is aimed at attracting private equity, real estate, and venture capital funds to set up and operate in Hong Kong.
In a limited partnership fund, the general partner (i.e. operating person with unlimited liability) and the limited partner(s) (i.e. investors with limited liability) have freedom of contract in respect of the operation of the partnership, including in matters relating to the admission and withdrawal of partners, the investment scope and strategy of the fund, the life of the fund, the frequency of financial reporting, and verifications of net asset value.
Under the new regime, investment managers must be licensed by the SFC (Securities and Futures Commission); proper custody of assets must be ensured; independent fund audits must be carried out annually; and qualified persons must be appointed to carry out AML/CFT functions.
No capital duty and no stamp duty will be charged to limited partnership funds.
The Limited Partnership Fund Bill will come into operation on 31 August 2020.