On 20 March 2020, the Government of the Hong Kong Special Administrative Region (HKSAR) gazetted the Limited Partnership Fund (LPF) Bill. This Bill is a key pillar of the HKSAR Government’s desire to make Hong Kong a more attractive destination for alternative asset investment funds. This move is driven by Hong Kong’s status as an international financial centre, and takes place in a cross-border environment of increased regulatory attention – for example on economic substance. The proposed effective date of the Bill (if passed) is 31 August 2020.
Commenting on the Bill, Cecilia Cheung, Managing Director of Alternative Fund Services (AFS) for Linnovate Partners, said:
“This proposal, some years in the making, offers a new and welcome option for general partners (GPs) who are considering domiciles for their funds. The proposed LPF is a simple regime to implement, and provides for a commonly used structure for alternative asset classes to attract more investment funds and fund managers to Hong Kong. As an international financial centre, Hong Kong gives managers access to a deep and wide pool of expertise already established for alternative assets. Hong Kong has an integrated ecosystem of service providers including asset servicing firms such as Linnovate Partners, placement agents, deal sourcing agents and professional service firms. It also provides managers with a well-trodden path to IPO for portfolio companies via the Hong Kong Stock Exchange.
“We note that the Government has taken regulatory best practice advice from other leading jurisdictions on anti-money laundering (AML) and Know Your Client (KYC) requirements, which further enhances Hong Kong’s reputation for sound and robust regulation. We also welcome the proposed regime’s policy for tax harmonization with existing unified fund exemption rules, as well as the proposed freedom on choosing accounting principles, leaving GPs with maximum flexibility to decide what suits their investors best.
I am confident in the ability of Linnovate Partners’ AFS team to meet and exceed the requirements of clients wishing to take advantage of the new regime. We have been steadily growing our capabilities in all regions including Hong Kong, and we welcome the opportunity to be of service to managers of LPFs established under the new regime.”
About Linnovate Partners. Headquartered and established in Hong Kong, Linnovate Partners has 4 additional overseas offices in London, Singapore, Beijing and Shenzhen. With a highly skilled and technologically advanced workforce of over 60 people, Linnovate Partners services over 100 funds with nearly USD $40bn assets under administration and provides tech-enabled asset servicing comprising fund administration, compliance and portfolio monitoring for over 3,000 private investments.