[ESTABLISHING A BUSINESS ENTITY IN HONG KONG]
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Authority of Partners Every partner is an agent of the firm and his co- partners and may bind each other to contracts entered into with actual, apparent or ostensible authority. The acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm bind the firm and his partners, unless the partner has in fact no authority and the third party dealing with him either knows that he is unauthorized or does not know or believe him to be a partner. Dissolution A partnership does not have continual existence. Subject to any agreement to the contrary, a partnership is dissolved by the expiration of fixed term (if any), notice to co- partners of any intention to dissolve the partnership, the death or bankruptcy of any partner, the illegality of the partnership or a decree made by the court. 3.4.2 Limited Partnership (LP) LPs are governed by the Limited Partnerships Ordinance (Chapter 37 of the Laws of Hong Kong). Constitution An LP must consist of one or more general partners and one or more limited partners. A body corporate may be a limited partner. A limited partner shall not take part in the management of the partnership business and does not have the power to bind the firm. As such, only general partners have full management control of the business and limited partners are considered to be merely financial contributors. An LP will not be dissolved by the death or bankruptcy of a limited partner.
Registration Apart from business registration, every LP must also be registered with the Companies Registry, failing which the partnership will be deemed to be a GP. Any subsequent change in the constitution or particulars of the LP must also be registered with the Companies Registry. Liability of Partners The general partners are liable for all debts and obligations of the firm whereas the limited 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. 3.4.3 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. 3.4.4 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
ILN Corporate Group – Establishing a Business Entity Series
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