[ESTABLISHING A BUSINESS ENTITY IN HONG KONG]
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owner of the business will have complete control over its management. The sole proprietor must apply for business registration within one month from the business commencement date. 3.4 Partnership A partnership, also referred to as a “firm”, is the relation which subsists between persons carrying on a business in common with a view of profit. Nature A partnership is not a legal entity separate from the partners. Partnership property is owned jointly by the partners. Types of Partnership There are mainly 4 types of partnerships in Hong Kong: (a) General partnership (GP); (b) Limited partnership (LP); (c) Limited liability partnership (LLP); and (d) Limited partnership fund (LPF). The rights and liabilities of the partners between themselves depend on the type of partnership and are governed by the partnership agreement (if any), the Partnership Ordinance (Chapter 38 of the Laws of Hong
Partnership Ordinance applies to govern the dealings and management of the partnership. Rights and Duties of Partners The rights and duties of the partners in relation to the partnership shall be determined by the Partnership Ordinance subject to any agreement between them to the contrary. The Partnership Ordinance provides that, among other things: (a) all the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses sustained by the firm; (b) every partner may take part in the management of the partnership business; (c) no person may be introduced as a partner without the consent of all existing partners; (d) any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners, but no change may be made in the nature of the partnership business without the consent of all existing partners; and (e) no majority of the partners can expel any partner, unless a power to do so is conferred by the partnership agreement. Liability of Partners Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner. He is also liable jointly with his co-partners and severally for any wrongful act or omission of any partner acting in the ordinary course of the business of the firm or with the authority of his co-partners for which the firm is liable while he is a partner.
Kong) and general common law. 3.4.1 General Partnership (GP) Constitution
GPs can either be formed by express agreements or implied by conduct. There is no limitation on the number, nationality or residence of partners. A body corporate is capable of being a partner. There is no registration requirement for setting up a GP except for business registration. In the absence of a partnership agreement, the
ILN Corporate Group – Establishing a Business Entity Series
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