What is the purpose of a fund audit?

The main purpose of a fund audit is to confirm that the fund’s general partners (GP) are operating in accordance with the fund’s limited partnership agreement (LPA), and that the fund’s financials reflect this compliance. A clean audit is one that doesn’t turn up any surprises: It reassures the fund’s limited partners (LPs) that the GPs are managing the fund as agreed.  A second purpose of an audit is to confirm the fund’s valuations of its portfolio companies, as well as the fund’s ownership position in them.   An audit assures your fund’s investors that a neutral, third-party accounting firm has confirmed not only the fund’s financial statements, but also its assessment of its own success.  

What are the fund structures available in Hong Kong?

Hong Kong provides various legal fund vehicles catered to the industry, with a corporate structure in the form of Open-ended Fund Companies (OFC) and a limited partnership model in the form of Limited Partnership Funds (LPF), complementing the long standing unit trust structure. 

A unit trust is established under a trust deed and the most common form of unit trust structure in Hong Kong is the two party trust deed. A unit trust is generally set up for asset protection, estate planning, or asset management purposes. Obligations are enacted pursuant to the provisions of the trust deed, the Trustee Ordinance and general common law. Selecting an appropriate trustee for the unit trust is crucial as they will manage the trust assets and ensure compliance with legal requirements. With the aforementioned Hong Kong fund structures, asset and wealth managers have flexibility and the ability to align the domicile of the fund with their commercial substance.