Hong Kong’S LPF Regime: 5 Months In, What’s New Hong Kong?

19 Jan 2021

What is it?

The Limited Partnership Fund (LPF) Regime is a new fund structure introduced by the Hong Kong government to provide better legal protections and flexible structuring of private equity funds, so as to boost its position as an asset and wealth management hub.

What’s the traction? 

73 LPFs have been registered since the launch of the regime.

 

How it Compares to Existing Regimes:

HK Open-Ended Fund Company (2018) HK Limited Partnership Fund (2020)
Must be registered and authorised by SFC (if it is a public OFC)  Must register with the Registrar of Companies

Authorisation of SFC not required unless offered to retail investors (Not subject to SFC-imposed restrictions)

Restricted to be used as a fund for investment managers based in Hong Kong For funds managed anywhere in the world
More suited for public funds and hedge funds To attract private equity and venture capital funds

*SFC: Securities and Futures Commission

What’s the Support Available?

The Hong Kong Government also introduced the Unified Funds Exemption – a new tax exemption which exempts privately offered funds including LPFs and other PE funds (from the payment of profits tax). 

 

References:

https://www.timothyloh.com/insights/current-issues/private-equity-carried-interest-tax-concession-tax-rate

https://iqeq.com/insights/hong-kong-limited-partnership-fund-explained

http://www.hk-lawyer.org/content/new-regime-limited-partnership-fund-introduced-hong-kong 

https://www.kwm.com/en/hk/knowledge/insights/hk-limited-partnership-regime-rolling-out-20200729