Traditionally, private equity fund sponsors in Hong Kong have used offshore vehicles such as Cayman Islands exempted limited partnerships and limited liability companies for establishing private equity funds. They were discouraged from using a domestic Hong Kong structure because (a) Hong Kong’s existing Limited Partnerships Ordinance (Cap. 37), which was enacted approximately 100 years ago, does not meet the needs of private equity fund sponsors, and (b) the other available Hong Kong fund structures, such as unit trusts and open-ended fund companies, are more suitable for public funds or hedge funds rather than private equity funds.
In order to attract private equity funds to establish and operate in Hong Kong, the Hong Kong government introduced the Limited Partnership Fund Bill (Bill) in March 2020 to establish a registration regime for qualifying funds to register as limited partnership funds (LPFs) in Hong Kong. The Bill is expected to be enacted by 31 August 2020.