Investment Fund Law Firm & Legal Services

Hong Kong fund structures: the LPF and the OFC

Two vehicles carry almost all Hong Kong-domiciled private funds. The limited partnership fund, under the Limited Partnership Fund Ordinance (Cap. 637), and the open-ended fund company, under Part IVA of the Securities and Futures Ordinance (Cap. 571). The choice gets treated as a tax question more often than it deserves to be. Both can reach the same profits tax position through the unified funds exemption, which is granted by section 20AN(2)(c) of the Inland Revenue Ordinance. What actually separates them is whether your investors can get their money out on demand.

The limited partnership fund

An LPF is a partnership, not a company, and it has no separate legal personality. Section 7(1)(b) requires one general partner and at least one limited partner, and the general partner has to fall inside one of the limbs in section 7(1)(c): a natural person over 18, a Hong Kong private company, a registered non-Hong Kong company, a Cap. 37 limited partnership, another LPF, or a non-Hong Kong limited partnership with or without legal personality. Since amendment 14 of 2025 added section 7(1)(c)(iiia), a private company limited by shares that has re-domiciled to Hong Kong now qualifies in its own right. That limb is new and it changes the plan for anyone bringing a general partner into Hong Kong on the company re-domiciliation route, because the entity no longer has to be replaced once it arrives.

You cannot file the registration yourself. Section 11(2)(d) requires the Form LPF1 application to be submitted on the general partner’s behalf by a Hong Kong law firm or a solicitor, and section 11(3) defines that by reference to section 2(1) of the Legal Practitioners Ordinance (Cap. 159). Government charges are HK$3,034 to the Companies Registry and HK$2,350 to the Inland Revenue Department for a one-year business registration certificate, so HK$5,384 in total. On a clean filing the certificate normally issues within four working days. After registration, Form LPF5 falls due within 42 days of each anniversary of the date the certificate was issued.

An LPF suits committed capital: private equity, venture, real assets and credit, or anything else with a drawdown model and a waterfall the parties want to write themselves.

The open-ended fund company

An OFC is a company with variable share capital. It has legal personality, a board, and shares issued and redeemed at net asset value, which is what an open-ended strategy needs. An umbrella OFC can hold sub-funds, and section 112S of the Securities and Futures Ordinance segregates their assets so that one sub-fund’s assets cannot be applied to another sub-fund’s liabilities, or to the company’s. Worth reading before you treat a sub-fund as a ring fence everywhere: the Code on Open-ended Fund Companies requires an umbrella to publish the SFC’s own caveat that segregated liability of this kind has not been widely tested in foreign courts.

Registration is one submission, not two. The applicant files with the SFC, which forwards the incorporation documents and fees to the Companies Registry. For a single private OFC that is HK$5,000 to the SFC and HK$3,034 to the Companies Registry, so HK$8,034 on day one, with business registration on top, because incorporating an OFC is a deemed simultaneous business registration application under section 5A of the Business Registration Ordinance.

One point gets written wrongly almost everywhere. An OFC delivers no annual return to the Companies Registry, and most commentary stops at that sentence. It still has to publish its annual report within four months of its financial year end and file that report with the SFC in the same window, under paragraphs 9.8 and 9.9 of the Code, which paragraph 1.7 applies to private OFCs as well as public ones. Budget for the audit and the filing.

There is also money on the table. The SFC’s grant scheme covers 70% of eligible set-up expenses, capped at HK$150,000 for a private OFC and HK$300,000 for a public one, one grant per manager, and it runs to 9 May 2027. It does not cover LPFs.

Which one, in practice

The short version: if investors subscribe and redeem, you want the OFC. If they commit and get drawn down, you want the LPF. A multi-strategy platform that wants one legal entity and several walled-off pools is an umbrella OFC. A single-strategy fund with a bespoke economic deal between a sponsor and a handful of institutions is an LPF. Where the answer is close, custody and prime brokerage tend to break the tie, because both are easier to document with a corporate counterparty.

Do not let the 2026 tax bill decide it for you. The Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026 has been through Bills Committee, but the Second Reading debate has not resumed and it is not law. Structure on the law as it stands and keep the election open.

What is regulated here: the fund, or the manager?

This is the point founders most often get backwards. A private fund offered to professional investors is not authorised by the SFC. Authorisation under section 104 of the Securities and Futures Ordinance is about offering to the public, and the professional investor exemption keeps a genuine private placement outside the section 103 offering offence.

It does nothing about licensing, which is a separate offence under section 114. Managing a portfolio of securities or futures on a discretionary basis is Type 9 regulated activity. Marketing the fund can be Type 1. A manager who reads the professional investor exemption as covering both is exposed on the half it was never about. The two offences sit in different sections for a reason, and the licensing position is worth settling before anything is offered to anyone.

Where a law firm sits in the file

Some of this is statutory rather than optional. A Form LPF1 registration has to be submitted by a Hong Kong law firm or a solicitor, so TITUS is the firm named under section 11(2)(d) on the applications it files, and it drafts the limited partnership agreement those applications sit on. The migration route on Form LPF2, for a Cap. 37 limited partnership that is already a fund, carries no such requirement under section 79(3), which makes the first question a simple one: which route are you on.

The anti-money laundering responsible person is the other appointment people get wrong. Section 33(2)(d) of the Limited Partnership Fund Ordinance allows a legal professional, and section 32 defines that through the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) as a solicitor or foreign lawyer, both of them natural persons. The contrast with the accounting limb, which expressly includes a corporate practice, is deliberate. The appointment is of a named solicitor, and the retainer has to say so.

Around the fund itself there is usually a manager company to incorporate, a general partner entity and sometimes a feeder, an SFC licensing application or a licensed delegate to appoint, employment contracts for the responsible officers, immigration for a principal relocating to Hong Kong, and, where the capital is a family’s, the succession layer sitting behind all of it. TITUS covers that legal ground. IMSG Corporate Services (imsg.com.hk) handles the corporate execution alongside it: incorporation, company secretarial, registered office, accounting, tax and the filings.

Fund formation work at TITUS is led by Michael Titus, the firm’s Founding Principal and a practising Hong Kong solicitor.

Before you pay anyone to draft anything

The useful homework is a page of investment terms: strategy, target size, who the first investor is, whether that investor can redeem, and where the manager will sit. Bring that and the structure question usually answers itself in one meeting. Our longer guides go through the mechanics in full.

• Setting up a Hong Kong limited partnership fund: Form LPF1 line by line, every appointment the application has to name, the government fees in full, and what actually moves the date of a first close.
• OFC or LPF: choosing a Hong Kong fund structure: the two vehicles compared on the points that decide it.
• Hong Kong funds and private investment vehicles: the wider map, including the structures that sit around a fund.
• DIPN 61 and the profits tax exemption for funds: how the Inland Revenue Department reads the unified exemption.
• The carried interest tax concession: what qualifies, and what the 2026 Bill would change.
• Bankable fund structures and AML controls: why the bank account, not the registration, is usually the long pole.

If you would rather start with the specifics of your own structure, book a consultation and bring the terms sheet.