Hong Kong Limited Liability Partnership

The participants of a limited liability partnership are both general partners and partners whose liability is limited. The liability of general partners for the obligations and debts of the enterprise is not limited, while partners whose liability is limited are liable within the size of their unpaid share in the authorized capital. Partners whose liability is limited cannot participate in the management of the partnership..

• Limited partners are not personally liable for debts that the company incurs as a result of the wrong actions of another partner.
• Due to the fact that the liability of some partners is limited by the size of their investments, attracting investments is simplified as investors invest their funds more willingly than in private enterprise.
• Greater efficiency can be achieved from the activities of the company, since the general partner has the right to independently conduct activities and is responsible for making decisions regarding the current work of the company. This makes it beneficial to involve limited partners who have the opportunity to invest in the activities of companies, but do not have sufficient time and experience in doing business.
• The legal requirements for limited liability partnerships are lower than for other types of companies.
• Partners whose liability is limited have the right to withdraw from the partnership, while the activities of the latter will not be terminated.

Disadvantages of a Limited Liability Partnership

• Since general partners have unlimited personal liability for the obligations of the company, there are not many partners who are willing to take on such a risk.
• Since the partners, whose liability is limited, cannot take part in the day-to-day activities of the company, they have no choice but to be passive investors.
• The establishment of a limited liability partnership is more expensive than the establishment of a general partnership.

Hong Kong Corporate Law