Unit 1605, 16/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central, Sheung Wan, Hong Kong

Fund Setup Service

Hong Kong has long been a preferred destination for investment managers and global investors seeking to establish funds in Asia. With the introduction of the Limited Partnership Fund (LPF) regime in August 2020 and the Open-ended Fund Company (OFC) structure in July 2018, Hong Kong now offers flexible and competitive onshore fund vehicles.

The LPF regime, administered by the Companies Registry (CR), enables private funds—including private equity and venture capital—to be registered in the form of limited partnerships in Hong Kong. It is designed to attract capital into corporates, particularly start-ups and innovation-driven enterprises in the Greater Bay Area.

The OFC structure, regulated by the SFC, is a corporate fund vehicle with variable share capital and limited liability. It caters to both public and private funds, offering key benefits such as tax exemptions, government grants, and cost savings compared to offshore structures.

Beyond Hong Kong, the Cayman Islands and British Virgin Islands (BVIs) remains a globally popular jurisdiction for fund formation, offering a mature legal framework and familiarity among international investors.

Whether you are looking at an onshore fund in Hong Kong or an offshore structure in the Caymans, multiple solutions exist to match your investment strategy, investor base, and operational needs. We help you navigate the options and choose the right path.

What is a Fund and Collective Investment Scheme (CIS)?

What is a Fund?
A fund is a collective investment vehicle that pools money from multiple investors. A professional fund manager invests the pooled funds in a diversified portfolio of assets—such as stocks, bonds, money market instruments, and others—according to a specific investment objective. Each investor holds a proportional share of the fund based on the amount invested.
By investing in dozens or even hundreds of securities, funds can effectively spread risk. The level of risk varies depending on the fund’s investment objective—some offer higher risk and potential returns, while others are more conservative. Investing in funds involves various fees, including subscription fees, annual management fees, and switching fees.
Before making any investment decision, it is essential to carefully read the fund’s offering documents and product key facts statement to understand its investment objective, strategy, risk factors, fee structure, and transaction procedures.

What is a Collective Investment Scheme (CIS)?
"Collective Investment Scheme" (CIS) is a broad term used in the Securities and Futures Ordinance to describe investment products of a collective nature. Common types of CIS in Hong Kong include mutual funds, unit trusts, MPF schemes, and real estate investment trusts (REITs).
Generally speaking, a CIS has the following four core characteristics:
1.Property Arrangement: The scheme involves an arrangement in respect of property (including money, goods, land, etc.).
2.Management Control: Participants do not have day-to-day control over the management of the property (even if they have the right to be consulted or to give directions).
3.Pooling and Central Management: The property is managed as a whole by or on behalf of the scheme operator, and the contributions of participants, along with the profits or income from which payments are made to them, are pooled.
4.Purpose of Returns: The purpose of the arrangement is for participants to participate in or receive profits, income, or other returns arising from the acquisition or management of the property.

This structure allows investors to participate in a diversified investment portfolio with a relatively lower entry barrier, while professional managers handle the asset management.

Comparison of Different Fund Structures

In the table below, we compare and summarize the key features and costs of the most common fund structures. Please note that this overview is not exhaustive—there are many other fund vehicle options available beyond those listed here.

Fund Structure(基金架構)	Limited Partnership Fund(有限合夥基金)	Open-ended Fund Company(開放式基金公司)	Exempted Limited Partnership(豁免有限合夥)	Private Investment Fund(私人投資基金)
Shortform	LPF	OFC	ELP	PIF
Jurisdiction	Hong Kong	Hong Kong	Cayman Islands	BVIs
Regulator	CR & SFC	SFC	Cayman Islands Monetary Authority (CIMA)	BVI Financial Services Commission
Popularity	Suitable for private equity, venture capital, real estate funds	Suitable for hedge funds, traditional retail/private funds	The most globally dominant structure for PE/VC funds, with high international recognition	Suitable for smaller managers, family offices, early-stage or single-family strategies seeking cost efficiency
Main Asset Classes	Private equity, venture capital, infrastructure, real estate, etc.	Traditional assets (equities, bonds), derivatives, and other alternative assets.	Private equity, venture capital, real estate, infrastructure, etc.	Private equity, venture capital, digital assets, hedge funds.
Key Statutory Requirements	At least one General Partner and one Limited Partner.	Must have at least one shareholder; can issue and redeem shares; must have directors.	At least one General Partner and one Limited Partner.	Must meet "private" nature criteria (e.g., ≤ 50 investors); must appoint an Authorised Representative.
AML Officer	Must appoint a "Responsible Person" for AML/CFT compliance.	Must comply with SFC's AML/CFT requirements applicable to licensed corporations.	Must appoint an AML Compliance Officer, Money Laundering Reporting Officer, and Deputy MLRO.	Must appoint suitable AML personnel and establish AML/CFT policies.
Audit Requirements	Must appoint an independent Auditor for annual audit.	Annual audit required.	Must appoint a CIMA-approved Auditor for annual audit; audited financials must be filed.	Must prepare audited financial statements (under IFRS or US GAAP) and file within 6 months of year-end.
Custody Requirements	No mandatory custodian, but the partnership agreement must contain arrangements for proper safekeeping of fund assets.	Must appoint an independent Custodian (unless exempt).	Assets must be held by a Custodian.	Must appoint a "Designated Person" responsible for asset safekeeping, following relevant guidelines.
Typical Setup Time	Within 7 days	Within one month	Within 2 weeks	Within 7 days
Cost	Low	Medium	High	Low

The Roles of Service Providers in a Fund

1）Investment Manager
The investment manager is responsible for making investment decisions on behalf of the fund. It manages the fund's portfolio in accordance with the investment objectives and strategies set out in the fund's offering documents.
Its duties typically include researching and selecting investments, executing trades, monitoring portfolio performance, and reporting to investors.
In Hong Kong, the investment manager must be licensed with the SFC for Type 9 regulated activity under the Securities and Futures Ordinance.
Meanwhile, in Singapore, the investment manager must be licensed with MAS under a Capital Markets Services (CMS) licence for fund management. It may operate as a Licensed Fund Management Company (LFMC) or a Venture Capital Fund Manager (VCFM), depending on the investor type and strategy.

2）Fund Director
Fund directors (or general partners in a limited partnership structure) form the governing body of the fund. They are responsible for overseeing the fund's operations and protecting the interests of investors. The fund directors focus on oversight and governance functions. Key responsibilities include:
➤ Overseeing service providers to ensure they are fulfilling their contractual obligations
➤ Reviewing the investment management agreement
➤ Monitoring conflicts of interest between the fund and its service providers
➤ Reviewing financial statements and other disclosures to investors
➤ Ensuring the fund operates in accordance with its constitutional documents and applicable regulations

3）Fund Administrator
The fund administrator handles the operational and administrative functions of the fund. Fund administrators are typically independent third-party firms with specialized expertise. This critical role ensures the fund runs smoothly on a day-to-day basis. Key responsibilities include:
➤ Processing subscriptions and redemptions of fund shares/units
➤ Conducting KYC on investors
➤ Maintaining the fund's accounting records
➤ Arranging the payment of fund expenses
➤ Calculating the net asset value (NAV) of the fund
➤ Providing investor servicing and liaison

4）Fund Auditor
An independent auditor is appointed to audit the fund's annual financial statements. The auditor's opinion provides assurance to investors and regulators that the financial statements present a true and fair view of the fund's financial position and performance, in accordance with the applicable accounting standards.

5）Legal Counsel
Legal counsel plays a fundamental role in the establishment of a fund and its ongoing regulatory compliance. Their primary responsibility is drafting the fund's constitutional documents and offering memorandum, ensuring that all disclosures accurately reflect the fund's structure and contain the legally required information. They also advise on compliance with the laws and regulations of the fund's domicile.

6）AML Officer
Funds and their directors are subject to stringent anti-money laundering and counter-terrorist financing (AML/CFT) regulations. A designated AML officer must be appointed to oversee the fund's obligation to comply with AML/CFT requirements. Key responsibilities include:
➤ Establishing and implementing AML/CFT policies and procedures
➤ Screening investors against sanction lists
➤ Ongoing monitoring of transactions for suspicious activity
➤ Making suspicious transaction reports to the relevant regulatory authorities

7）Custodian
A custodian is a financial institution (usually a licensed bank or trust company) responsible for the safe keeping of the fund's assets. The custodian holds the fund's investments (such as shares, bonds, or other securities) in segregated accounts to minimise the risk of loss or misappropriation.

Before You Start

➤ Define investment parameters – Set investment objective, strategy, asset classes, scope/restrictions, risk profile, and target investors
➤ Select fund structure and jurisdiction – Choose the optimal vehicle and domicile
➤ Define commercial and operational terms – Establish fee structure, liquidity terms, and constitutional arrangements
➤ Appoint key personnel – Secure fund directors (or general partner) and investment manager
➤ Engage legal counsel – Instruct lawyers to draft constitutional documents and offering memorandum
➤ Appoint other service providers – Engage fund administrator, custodian, auditor, and AML officer
➤ Submit formation application – File required documents with relevant regulatory authorities
➤ Establish custodian agreement – Formalize arrangements for safekeeping of fund assets

Fund Formation Procedure

Under normal circumstances, the entire fund formation process takes approximately 1 to 4 months, depending on the chosen structure and jurisdiction. The timeline generally consists of two main phases: preliminary preparation and regulatory processing.

The preliminary preparation phase typically takes up to one month. During this time, the fund sponsor defines the investment parameters, selects the appropriate structure and jurisdiction, appoints key personnel such as fund directors and the investment manager, engages legal counsel, and prepares the constitutional documents.

Following preparation, the regulatory processing phase commences, which can take anywhere from 1 to 2 weeks, up to 1-2 months depending on the jurisdiction and fund type.

It is important to note that these timelines may vary depending on the complexity of the fund structure, the completeness of documentation submitted, and the current workload of the relevant regulatory authority.

What ComplianceOne can do for you

ComplianceOne provides comprehensive fund setup assistance, guiding you through every stage of the formation process:

Strategic & Advisory:
✔ Advise on fund structure selection based on your investment strategy and target investors
✔ Source and coordinate with legal counsel to draft constitutional documents and offering memoranda
✔ Assist in sourcing other key service providers (fund administrator, custodian, auditor, etc.)

Documentation & Policy:
✔ Establish AML/CFT policies and procedures tailored to your fund
✔ Draft and prepare necessary application documents
✔ Train senior management on regulatory obligations and compliance requirements

Recruitment & Compliance:
✔ Source and assist in the recruitment of AML officers and other key personnel

Regulatory Submission
✔ Prepare and submit fund formation applications to relevant regulatory authorities
✔ Liaise with regulators throughout the application process and address any queries