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Fund establishment and documentation

What are the key considerations when selecting your fund domicile?

In recent years, the ‘onshorisation’ trend of funds has been prevalent, as several developments in the global funds space have impacted the way asset managers approach the fund domiciliation question. Asset managers are increasingly looking to onshore vehicles to match with the jurisdiction where they either do business or invest.

What are the fund structures available in Hong Kong?

Hong Kong provides various legal fund vehicles catered to the industry, with a corporate structure in the form of Open-ended Fund Companies (OFC) and a limited partnership model in the form of Limited Partnership Funds (LPF), complementing the long standing unit trust structure. 

Key features

Open-ended Fund Company (OFC)

 Limited Partnership Fund (LPF)

Number of Directors required

 2, with at least 1 director independent of the custodian 1 general partner and at least 1 limited partner 
Directors’ residence requirement

No

No residence requirement for general partner or limited partner

Fund manager

 Requires a Type 9 (asset management) licensed Investment Manager under SFC

If no regulated activities under SFO is involved, there is no need to appoint an external licensed investment manager

Auditor

An auditor must be appointed

An auditor must be appointed

Custodian

A custodian must be appointed

No requirement to appoint a custodian, but the GP is under duty to ensure the proper custody of LPF’s assets
Public availability of Shareholder lists No No
Re-domiciliation Yes Yes

A unit trust is established under a trust deed and the most common form of unit trust structure in Hong Kong is the two party trust deed. A unit trust is generally set up for asset protection, estate planning, or asset management purposes. Obligations are enacted pursuant to the provisions of the trust deed, the Trustee Ordinance and general common law. Selecting an appropriate trustee for the unit trust is crucial as they will manage the trust assets and ensure compliance with legal requirements. With the aforementioned Hong Kong fund structures, asset and wealth managers have flexibility and the ability to align the domicile of the fund with their commercial substance.

Where to read more on how to set up today in Hong Kong?

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