This update focuses on the establishment of open-ended fund companies in the context of other possible fund structures under Hong Kong law. Open-ended fund companies are a new structure although the relevant amendments to Hong Kong's Securities and Futures Ordinance (Cap. 571) (SFO) have not yet come into force.
By way of background, under existing Hong Kong laws, an open-ended investment fund is typically established in the form of a unit trust constituted by a trust deed (but not in the form of a company due to various restrictions on capital reductions, on making distributions out of profit and on filing of returns of allotments in respect of new shares under the Companies Ordinance (Cap. 622) (CO)) and a closed-end investment fund may be established in the form of a limited partnership constituted by a limited partnership agreement.
It is noted that, from an international perspective, a corporate structure with variable capital for open ended funds and LLCs (as described below) and limited partnerships for closed-end funds are popular structures in other jurisdictions. This update also explores these structures.