BC Capital’s successful registration of the new Limited Partnership Fund Regime in Hong Kong
On September 11th, 2020, as part of the first group of financial institutions, BC Global Asset Management Limited has successfully completed the registration of three Limited Partnership Funds (LPF).
BC Capital’s first mover advantage of its successful LPF registration can be attributed to its early preparations and due diligence work. In view of the rising cost and increasingly tightened regulatory requirements of the Cayman Islands Funds regime starting from 2019, BC Capital has been diligently preparing to fulfill eligibility requirements and looking for an alternative way that would be more suitable for its fund structuring and more cost-effective for investors. Concurrently, Hong Kong’s new Limited Partnership Funds regime became a viable option as it provides a better fitting structure and greater flexibility for fund registration, especially for private equities fund investment projects.
With the launch of LPF approaching, Hong Kong’s LPF has become one of the hot topics in the asset management industry in Greater China. In collaboration with King & Wood Mallesons Law Firm, BC Capital has been actively consulting professional advices and paying meticulous attention regarding the development of LPF since its inception last year.
On August 31st, 2020, the same day as the official commencement of Limited Partnership Fund Ordinance (“the ordinance”), BC Capital applied for LPF registration with the help of King & Wood Mallesons Law Firm. In less than two weeks, three LPFs have been successfully approved by the Securities & Futures Commission of Hong Kong. The three LPFs will be managed by BC Global Asset Management Limited (SFC Type 1, 4, 9 License) as the investment manager along with BC Capital Asia Limited as the General Partner. In the upcoming private equities fund investment projects, BC Capital will focus on setting up its funds in the LPF structure.
BC Capital is incentivized by the following advantages offered by the LPF structure:
1. Contractual flexibility, no hard restriction on investment amount or investment scope;
2. High degree of privacy for the Limited Partner as information is not required to be disclosed;
3. Enjoy profit tax exemptions when certain conditions are met;
4. Reduced operating cost in the absence of capital gains tax and stamp duty in Hong Kong;
5. Low maintenance cost due to a straightforward, cost-efficient registration and dissolution mechanism.
As a world-renowned financial, logistics, trading, and aviation hub, Hong Kong provides a well-connected international network with high legal standards for business operations. However, with changes constantly evolving in the private fund industry, it is imperative for Hong Kong to keep up with the pace and reform its LPF regime. According to the “Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area”, Hong Kong’s new LPF structure not only has fully manifested the idea of being “innovation-driven and revolutionary”, but also has bolstered the Hong Kong’s international financial status as well as competitiveness of the asset management industry.
BC Capital’s bold attempt in applying for Hong Kong’s LPF has reflected that it is not shy of innovation and changes. While the company strives to maximize returns for investors, it also seeks for the most cost-effective investment solutions. Putting investors’ needs as top priority, BC Capital will continue to expand its private fund business, actively uphold and ensure high standards in investment management and compliance in order to provide trustworthy asset management services.