[ESTABLISHING A BUSINESS ENTITY IN HONG KONG]
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partners are liable for the debts and obligations of the firm only to the amount contributed to the firm as capital or property at the time of entering into the LP. 3.5.3 Limited Liability Partnership (LLP) An LLP is a form of partnership available for law firms in Hong Kong and is regulated by the Legal Practitioners Ordinance (Chapter 159 of the Laws of Hong Kong). An LLP operates in substantially the same manner as a GP except that a partner in an LLP is not, solely by reason of being a partner, jointly or severally liable for any partnership obligation that arises from the provision of professional services by the partnership as an LLP as a result of a default of another partner or an employee, agent or representative of the partnership. A partner continues to be personally liable for his or her own default, the default of the firm’s employee, agent or representative whom he or she directly supervised in respect of the matter at the time of the default, as well as in circumstances where he or she knew of the default at the time of its occurrence and failed to exercise reasonable care to prevent its occurrence. 3.5.4 Limited Partnership Fund (LPF) The LPF regime under the Limited Partnership Fund Ordinance (Chapter 637 of the Laws of Hong Kong) enables private funds (including private equity and venture capital funds) to be registered in the form of limited partnerships in Hong Kong. Eligibility A fund is eligible to be registered as an LPF if, among other requirements: (a) the fund is constituted by a limited partnership agreement which does not contravene the applicable laws;
(b) the fund has one general partner and at least one limited partner; (c) the fund has an office in Hong Kong to which communications and notices may be sent; and (d) not all the partners in the fund are corporations in the same group of companies. The general partner can be a natural person, a private Hong Kong company limited by shares, a registered non-Hong Kong company, a limited partnership, an LPF or a non-Hong Kong limited partnership. A limited partner can be a natural person, a corporation, a partnership, an unincorporated body or any other entity. The partners have freedom of contract in respect of the operation of the fund. The matters that may be covered by a limited partnership agreement may include the organization, management structure, governance and decision-making procedures of the fund, the investment scope and strategy of the fund, etc. Liability of Partners A limited partnership fund does not have a legal personality. Similar to a limited partnership, the general partner in an LPF is ultimately responsible for the management and control of the fund, and will assume unlimited liability for the debts and obligations of the fund. The limited partners have no day-to-day management rights or control over the assets held by the fund, but rather they have the right to participate in the income and profits arising from the fund. The liability of the limited partners in an LPF is limited to the extent of their agreed contributions. Other Officers The general partner in an LPF must appoint:
ILN Corporate Group – Establishing a Business Entity Series
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