Hong Kong has passed two important legislation by introducing limited partnerships, an investment vehicle which is actively used in the fund industry. The Limited Partnership Fund Bill and the Limited Partnership Fund Ordinance will come in force on August 31st, 2020. Hong Kong is catching up with other jurisdictions like Cyprus, which recently introduced the Cyprus Limited Liability Partnership under the Partnership and Business Name Law Chapter 116 in 2019; the UK, where the UK Private Fund Limited Partnerships were introduced in July 2015 under the Limited Partnership Act 1907 and others. Singapore also has the Singapore Limited Liability Partnership under the Limited Liability Partnership Act 2005.
There is a substantial difference between the Limited Partnership (LP) and the Limited Liability Partnership (LLP) mainly in the liability in members. LP has two types of members, i.e. a general and limited. The general member is fully liable for any debt of LP and can be involved in managing the LP business. On the other hand, the liability of limited members is limited, however, they are not allowed to get involved in the management of the LP business. LLP has the corporate personality and the liability of all members is limited to the contribution they have made in LLP. On this matter, LLP is similar to the limited liability company (LLC).
However, LLP is transparent for tax purposes. LLP members are taxed on profit in the jurisdiction where the members are the tax residents.