In this course · 3 of 5
Course 1
Choose your structure
5 lessons · 5 min
- 1Sole Proprietorship vs Partnership vs Limited Company in Hong Kong
- 2How to Set Up a Sole Proprietorship in Hong Kong and Liability
- 3Hong Kong Partnership vs Limited Partnership: How They Work
- 4What Is a Private Limited Company in Hong Kong? Pros and Cons
- 5Branch, Representative Office or Subsidiary in Hong Kong?
The short answer
In a Hong Kong general partnership, every partner can bind the firm and each is personally liable for all its debts; a written agreement is not legally required. In a limited partnership registered with the Registrar of Companies, only the general partner has full liability and limited partners risk only their contribution.
General partnership (Partnership Ordinance, Cap. 38)
- Formed when two or more persons carry on business in common with a view to profit; a written agreement is not legally required but is strongly advisable.
- Every partner acts as agent of the firm and the other partners. What one partner agrees in the ordinary course of business can bind all.
- Partners share the debts jointly and severally, meaning a creditor can pursue any one partner for the whole amount.
- Register the business with the IRD Business Registration Office within one month of starting.
Limited partnership (Cap. 37)
- At least one general partner (fully liable) and at least one limited partner (liable only up to the capital contributed).
- A limited partner must not take part in management or can lose the protection.
- It must be registered with the Registrar of Companies.
- Limited partnerships have more restrictions, so most small businesses choose a general partnership or a limited company.
What a partnership agreement should cover
- Names, capital contributions and profit/loss shares.
- Each partner's role, powers and decision-making.
- What happens when a partner leaves, dies or disputes arise, and how partnership property is treated.
Limited partnership funds (Cap. 637) follow separate rules and are not covered here.
Legal basis and sources
The law
- Partnership Ordinance (Cap. 38)
- Limited Partnerships Ordinance (Cap. 37)
- Business Registration Ordinance (Cap. 310)
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
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