Types of Partnerships
Partnerships are simply bodies of persons carry on business together. In Hong Kong, there are 4 types of partnerships. None of these different types of partnerships are separate legal persons.
Under Hong Kong law, every partnership must be registered.
A partnership arises whenever 2 or more persons carry on a business in common with a view to profit in a form otherwise than through the incorporation of their business. Partnerships are governed by the Partnership Ordinance.
Though not required, partners in a general partnership will normally set out the terms of their relationship in a written partnership agreement.
In the normal course, each partner in a partnership is the agent of the partnership and his other partners and has the power to bind the partnership and his partners. As a corollary, every partner in a partnership is liable jointly with the other partners for all the debts and obligations of the partnership.
In Hong Kong, a limited partnership is a special type of partnership in which, through registration under the Limited Partnership Ordinance, certain partners, known as limited partners, are not liable for the debts and obligations of the partnership beyond the amount which they have agreed to contribute at the time of entering the partnership.
In a limited partnership, one or more partners, known as general partners, manage the affairs of the partnership and have the power to bind the partnership. Limited partners may not take part in the management of the partnership and have no power to bind the partnership. If a limited partner takes part in the management of the partnership, he loses limited liability.
Limited Liability Partnerships
Limited liability partnerships are formed under the Legal Practitioners Ordinance and are available only to law firms.
Limited Partnership Funds
A limited partnership fund ("LPF") is a special type of Hong Kong partnership which is designed for private equity funds. Like a limited partnership, a limited partnership fund has a general partner, which manages the partnership and bears unlimited liability, and at least one limited partner, which has no power to take part in the management of the partnership.
LPFs must be registered under the Limited Partnership Funds Ordinance.
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