Registration of Limited Liability Partnerships in Hong Kong

If you've searched for how to register an LLP in Hong Kong, you've probably seen the UK or Singapore version: a partnership where every partner's personal assets are protected. Hong Kong doesn't offer that to most businesses.

The Hong Kong LLP exists, but only for law firms. Anyone else looking for a partnership with limited liability has to choose between a limited partnership, where at least one partner still carries unlimited liability, or a company.

This guide explains each partnership option, how to register it, how partnerships are taxed, and when a private limited company is the better fit.

Partnership Structures in Hong Kong at a Glance

The Hong Kong LLP Is for Law Firms Only

Hong Kong introduced the LLP through the Legal Practitioners (Amendment) Ordinance 2012, which came into force on 1 March 2016. According to the Department of Justice's guide to LLPs for law firms, it applies to solicitors' firms and foreign law firms practising in Hong Kong.

In a Hong Kong LLP, an innocent partner isn't personally liable for the firm's liabilities that arise from another partner's or an employee's negligence or misconduct in providing professional services. That protection comes with conditions. The firm must hold top-up insurance of at least HKD 10 million per claim on top of the standard professional indemnity cover, and it must tell clients it's an LLP and which partner supervises their matter.

Even then, a partner stays liable for their own mistakes and for the people they directly supervise. So the Hong Kong LLP gives narrower protection than the LLPs many readers know from other countries, and only lawyers can use it.

General Partnership

A general partnership is two or more people carrying on a business together with a view to profit. You don't register a partnership agreement with any authority, though you should still have one in writing.

Every partner is liable jointly and severally for all the firm's debts and obligations. If the business can't pay, creditors can pursue any partner's personal assets, including for a debt another partner created. Under the Partnership Ordinance, partners share profits equally unless your partnership agreement says otherwise.

How to Register a General Partnership

A partnership is a business, so it must hold a Business Registration Certificate from the Inland Revenue Department (IRD). Apply within one month of starting the business. There's no separate registration with the Companies Registry.

Before you start, agree in writing how profits are split and what happens if a partner leaves. The Partnership Ordinance fills any gaps with default rules that may not suit you.

Limited Partnership

A limited partnership, governed by the Limited Partnerships Ordinance (Cap. 37), has two kinds of partner:

• General partners manage the business and are liable for all its debts.
• Limited partners contribute capital and are liable only up to the amount they contributed.

A limited partner can't take part in managing the business or bind the firm. If they do, they become liable for debts incurred during that time as if they were a general partner. They also can't take back any part of their contribution while the partnership continues.

A limited partnership that isn't registered is treated as a general partnership, and its limited partners lose their protection.

How to Register a Limited Partnership

According to the Companies Registry's guide to registering a limited partnership, you file Form 1 with the Registry, online or in person, and pay:

The Registry normally issues the Certificate of Registration of a Limited Partnership within 5 working days. You also need a Business Registration Certificate from the IRD, like any other business.

Any change to the registered details, such as a new partner or a change in a limited partner's contribution, must be filed on Form 2 within 7 days. The fee is HKD 26 per statement of change, plus HKD 8 for every HKD 1,000 of new or increased contribution.

Limited Partnership Fund

Since 31 August 2020, private investment funds can register as a limited partnership fund (LPF) under a separate law, the Limited Partnership Fund Ordinance (Cap. 637). An LPF is built for fund managers raising capital from investors. It isn't meant for an operating business, so if you're running a trading or services company, it won't apply to you.

How Partnerships Are Taxed

A partnership files one Profits Tax Return for Persons Other Than Corporations (Form BIR52) each year, showing the firm's profits and each partner's share, according to the IRD's guidance for the self-employed.

Under the two-tiered profits tax system, an unincorporated business pays 7.5% on its first HKD 2 million of assessable profits and 15% above that. Where a company is a partner, its share of the profits is taxed at the corporate rates of 8.25% and 16.5%.

A partnership must also keep business records, in English or Chinese, for at least 7 years. Partnerships don't file annual returns with the Companies Registry, and they don't need an audit by law, though the IRD may still ask for accounts that support the return.

When a Private Limited Company Is the Better Fit

Most people searching for an LLP want two things: shared ownership and personal protection. In Hong Kong, a private limited company gives you both.

Each shareholder's liability is limited to the shares they hold, and every owner can be involved in running the business without losing that protection. A company pays profits tax at 8.25% on its first HKD 2 million of assessable profits and 16.5% above that.

The trade-off is more compliance. A company must appoint a company secretary, and it files an annual return and audited accounts every year. For many founders, that's a fair price for protecting their personal assets. Our guide to registering a private limited company in Hong Kong covers the requirements in detail.

How Statrys Can Help

Statrys sets up and maintains Hong Kong private limited companies online, with a company secretary and registered address included. We don't register partnerships. Statrys doesn't currently onboard US clients.