[ESTABLISHING A BUSINESS ENTITY IN HONG KONG]
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specified in the limited partnership agreement. The fund must also have a registered office situated in Hong Kong. The information registered with the Companies Registry is publicly available, but the register will not contain information as to the identity or background of the limited partners. Licensing Requirements Where the investment manager or its delegate carries on a business in a regulated activity, such as asset management, as defined in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), the investment manager or its delegate is required to be licensed or registered by the SFC in respect of such regulated activity. Tax Benefits LPFs may benefit from advantageous tax arrangements. For example, they may be exempt from profits tax if they can satisfy certain conditions. Further, while an in-kind capital contribution to the fund, or a distribution to a limited partner, by way of transfer of dutiable assets (e.g., Hong Kong stock and immovable properties) will attract stamp duty, the contribution, transfer or withdrawal of an interest in an LPF in cash is not subject to stamp duty. Re-domiciliation or Migration A fund set up in the form of an LP, whether under the laws of a jurisdiction outside Hong Kong or in Hong Kong and meeting the eligibility requirements may apply to be registered as an LPF in Hong Kong. 3.5 Open-ended Fund Company (OFC) Hong Kong funds have traditionally been established as unit trusts instead of in corporate form due to the restrictions on
capital reduction and distribution out of capital under the Companies Ordinance. An OFC is a relatively new structure introduced in 2018 and refers to an open-ended collective investment scheme structured in corporate form with limited liability and variable share capital. The main purpose of an OFC is to serve as an investment fund vehicle and manage investments for the benefit of its shareholders. The SFC registers and oversees OFCs whereas the Companies Registry is responsible for their incorporation and corporate filings. Incorporation Under a “one - stop” approach, the application documents for incorporation and business registration shall be delivered to the SFC. The Companies Registry will issue the Certificate of Incorporation and Business Registration Certificate in one go after approval is given by the SFC. Registration OFCs, whether publicly or privately offered, are required to be registered with the SFC. Same as other publicly offered funds, publicly offered OFCs are also required to obtain prior authorization from the SFC, unless an exemption applies. An OFC is required to, among other things, (i) have a board of directors, an investment manager, and a custodian; (ii) fulfil certain disclosure requirements for documents; (iii) comply with applicable investment restrictions; and (iv) comply with certain ongoing disclosure requirements. 3.6 Choice of Business Entities When choosing the type of business entity that is suitable for a particular business, regard should be given to all the relevant factors
including but not limited to: (1) Nature of the business
ILN Corporate Group – Establishing a Business Entity Series
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