On the police account of it, Fun Coffee was sold as a Vietnamese coffee venture, complete with talk of high-tech equipment and “coffee gene optimisation”. Investors bought packages through an app and were paid in USDT, with the top tier promising roughly a 278% annualised return. Authorities arrested six people aged 51 to 64 in Hong Kong on suspicion of conspiracy to defraud, and two more in Macau. Victims came forward slowly, as they do in most investment fraud, and by then the money had moved.

If you have been hit by a crypto scam in Hong Kong, or your bank account has been frozen because scam proceeds passed through it, here is what actually happens next.

How these scams work

Four patterns account for most of what we see.

First, the long con, which is the biggest by value. Someone builds a relationship over weeks or months, through a dating app or a WhatsApp group, then introduces an investment. Police recorded 25 romance scams in the single week of 24 to 30 July this year, with combined losses close to HK$70 million. The largest was a woman in her 50s who sent about HK$26 million over six months, with roughly HK$22 million of it into mule accounts. The app she was shown displayed gains of more than 800%.

Fake platforms are the second. The balance goes up, and the problem appears only at withdrawal, when fees kick in: a tax, an unlock deposit, an “anti-money-laundering verification” payment. Each one is the same scam continuing. If you want the warning signs before money moves, we have written about the red flags worth checking first.

Impersonation of genuinely licensed platforms is the third, and it is the one most likely to catch a careful investor. On 28 July 2026, the SFC added four fraudulent websites to its list of suspicious virtual asset trading platforms after DFX Labs, an SFC-licensed platform, reported that they were impersonating its own site. On 14 August 2026, the SFC published a much longer batch of lookalike domains tied to the HashKey name. A licence protects you only if you reach the licensed platform. Check the SFC’s list rather than a link you were sent.

Fourth and finally, the proceeds of the scam are layered through ordinary Hong Kong accounts: an OTC trader, a small business that took a payment, someone who sold a car. That last group never invested in anything, and it produces the call we take most often.

The frozen account, and what a “letter of no consent” actually is

Once a bank knows or suspects that funds represent the proceeds of an indictable offence, section 25A of the Organized and Serious Crimes Ordinance (Cap. 455) (the “OSCO”) requires it to disclose that knowledge or suspicion. In practice that means filing a suspicious transaction report with the Joint Financial Intelligence Unit.

Under section 25A(2), continuing to deal with the property after disclosure is only a defence to a money laundering charge if the authorized officer consents to the dealing before it takes place. If consent is withheld, the authorized officer issues what is commonly known in practice as a “letter of no consent”. The bank, facing potential liability under section 25 for dealing with property it knows or has reasonable grounds to believe is tainted, then chooses not to process the transaction or release the funds.

Notice who actually takes that step. The bank does. Neither “freeze” nor “letter of no consent” appears in the statutory text of section 25 or section 25A of the OSCO. Both are terms of practice, not of law. That distinction can sound like a technicality, until you try to challenge the restriction on your account.

The lawfulness of the regime is now settled, and not in account holders’ favour. In Tam Sze Leung v Commissioner of Police, the Court of First Instance held in late December 2021 that the “no consent regime”, as operated, was unlawful. The Court of Appeal reversed that in April 2023, upholding the regime’s validity, and the Court of Final Appeal dismissed the final appeal on 10 April 2024, [2024] HKCFA 8, affirming the legality and constitutionality of issuing letters of no consent. Any guide telling you the regime has been struck down predates that judgment.

What that leaves is uncomfortable but manageable. Sections 25 and 25A of the OSCO do not prescribe any statutory time limit on how long a letter of no consent may remain in effect, nor any statutory right of appeal or prescribed application procedure for seeking its withdrawal. In practice, an investigating officer needs to understand where your money came from. Most releases we have handled came from properly documenting the source of funds and engaging early, not from litigation. Judicial review remains available in principle, but after the Court of Final Appeal’s ruling upholding the regime’s constitutionality, the grounds for a successful challenge are narrow, and the process is expensive.

There is a second risk innocent account holders rarely see coming. Section 25(1) of the OSCO catches anyone who deals with property while knowing or having reasonable grounds to believe that it represents the proceeds of an indictable offence, and “reasonable grounds to believe” is assessed objectively, by reference to what a reasonable person would have concluded from the facts known to the account holder, not by reference to the account holder’s own state of mind. You can be a victim of one scam and a suspect in another. If an officer starts asking why you accepted HK$400,000 from someone you had never met, that is the point to call a criminal defence lawyer rather than the point to explain yourself.

The first 48 hours

Report it properly. The Anti-Scam Helpline 18222 runs around the clock, but the ADCC is explicit about what it is: “The hotline only provides consultation services. If you suspect that you have fallen prey to a scam, please report the case at the nearest police station. For emergency, dial 999.” You can also file through the Police e-Report Centre using its “Report Technology Crime and Deception” form. A call to 18222 alone is not a crime report, and people lose days on that.

If money left by bank transfer, call your own bank the same day. Speed is the one variable you control. Police intervened in 4,060 deception cases in 2025 and intercepted about HK$480 million, and interception works in hours, not weeks.

Preserve evidence before it disappears. Screenshot the app and the balance now, because these platforms go dark quickly. Keep the transaction hashes and receiving wallet addresses, which are where any tracing work starts, along with the chat history, transfer records, the names and account numbers you paid, and the URL you used.

Then stop paying. If the platform wants a fee to release your funds, that fee is the scam. The same goes for anyone offering to recover your money for an upfront payment, a well-established second wave aimed at people who have already lost once.

Who actually does what

Victims lose weeks writing to the wrong body. The police investigate, and they are the only route to a freeze on a receiving account.

The SFC regulates licensed platforms and publishes warnings, including the Alert List and the list of suspicious virtual asset trading platforms. It does not investigate your individual loss and cannot recover your money.

The HKMA supervises banks and, under the Stablecoins Ordinance (Cap. 656), licensed stablecoin issuers. If your complaint is about how a bank handled your account, the HKMA is relevant. If it is about a scam platform, it is not the right door.

Civil recovery: what is possible, and what usually is not

Hong Kong law is in better shape here than most people expect. In Re Gatecoin Ltd (in liquidation) [2023] HKCFI 914, Linda Chan J held that cryptocurrency is property under Hong Kong law and can be held on trust. That opens the door to proprietary injunctions over traceable assets, Mareva injunctions to stop dissipation, and Norwich Pharmacal and Bankers Trust disclosure orders against banks and exchanges to identify who is behind a wallet.

Now the honest part.

These orders are expensive, usually sought urgently and without notice, and the courts hold applicants to a demanding standard. In Wang Weiqing v Zhuo Yihao [2025] HKCFI 4941, the Court of First Instance discharged proprietary and Mareva injunctions obtained over an exchange’s wallet, on grounds including material non-disclosure at the without-notice stage. The court did grant a Bankers Trust order compelling the exchange to hand over account information, which is the more useful half of that judgment. Its practical observation is worth carrying too: it is often more productive to work with an exchange than to go straight to a without-notice application against it.

Three constraints apply to nearly every case. Funds pooled in an exchange’s omnibus wallet are harder to trace than funds in a private wallet. A freezing injunction requires an undertaking in damages, so you need assets to back it. And most exchanges holding the money are offshore, so a Hong Kong order may need recognition elsewhere before it does anything.

The cheap routes do not fit either. The Small Claims Tribunal is capped at HK$75,000 and allows no legal representation, which makes it useless against an unknown defendant behind a foreign wallet.

The same liquidation carries a warning the summaries leave out. When the court came to distribution in Re Gatecoin Ltd (in liquidation) [2025] HKCFI 493, customers who had accepted the exchange’s 2018 terms and conditions ranked as unsecured creditors, while those who had not kept a proprietary interest. Just because cryptocurrency is property does not mean your cryptocurrency is yours.

Recovery works best when the money is still identifiable, when it landed somewhere with a name attached, and when you moved in days rather than months. Any lawyer promising more than that at a first meeting is worth a second look.

If you run a platform or a fintech

Sections 25 and 25A of the OSCO apply to businesses and their staff, not only to banks. Handling proceeds with reasonable grounds to believe what they are carries up to 14 years on indictment, and tipping off a customer that a report has been made is itself an offence under section 25A(5). Operating a virtual asset service business without the required licence is an offence under section 53ZRD of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).

Three things are worth doing now. Work through SFC circular 26EC35 of 9 July 2026 on protecting clients against phishing, which sets a compliance deadline of 8 July 2027 and is not a small piece of work. Monitor for domains impersonating your brand and report them to the SFC, as DFX Labs did in July. And settle your process for responding to police enquiries before the first one arrives.

If you are in dealing, custody, advisory or asset management, the consultations have concluded, and the government has said it intends to legislate. No deeming arrangement has been proposed, so expect a hard commencement date rather than a grace period. If you would rather get ahead of that, we can review your regulatory position now.

When to get a lawyer involved

Call someone the same week if your account has been frozen and the bank will not say why, if police have asked to interview you about funds that passed through your account, if you have lost enough that an urgent injunction is proportionate, or if you have traced where the money went and it is still sitting there.

The cases that end well are almost always the ones where someone moved early.

Been scammed, or had an account frozen? TITUS acts for individuals dealing with frozen accounts and crypto fraud losses, and for platforms and fintechs that want their compliance position reviewed before a regulator or a police officer asks. Contact us for a confidential consultation.

Disclaimer

If you suspect you have been the victim of fraud or a crypto-related scam, contact the Hong Kong Police Force’s Anti-Deception Coordination Centre on 18222 without delay. This article is for general information only and does not constitute legal advice on any specific case. If your assets or accounts are at risk, seek qualified Hong Kong legal advice as soon as possible, because time is often critical in asset-recovery matters.

This article reflects our understanding of the position under Hong Kong law and applicable regulatory guidance as at 21 August 2026. The regulatory framework for virtual assets continues to develop and is subject to change.

The post Crypto Scams in Hong Kong: What to Do If You’ve Been Defrauded or Your Account Is Frozen appeared first on Titus.

The circular is reference 26EC35, and it does two things: it sets expectations for how clients log in and bind devices, and it sets expectations for how firms watch accounts once clients are inside. Most of the coverage has focused on the first half. The second half is where we think the enforcement risk actually sits.

What the circular requires

Four workstreams, in the SFC’s own order.

Prevention comes first. Firms should use “strong and phishing-resistant authentication solutions for client login and device binding”. The operative sentence on SMS codes is worth quoting exactly, because it is narrower than the headlines suggest: “The SFC does not consider OTP to be a phishing-resistant authentication solution, and internet brokers and VASPs should not use it for the processes mentioned under paragraph 5 above.” Paragraph 5 covers two processes only, login and device registration. This is not a blanket ban on one-time passwords. The circular itself still contemplates SMS as a notification channel.

Detection comes second, and it is the part firms are underestimating. The SFC wants monitoring against predefined thresholds set by reference to each client’s profile, trading history, device usage and login patterns. It names the red flags it expects you to catch: trades inconsistent with previous patterns, orders placed at unusual hours, transactions resulting in significant losses within a short period, sudden large volumes in illiquid or small-cap stocks, and transactions conducted shortly after a password reset, a change of contact details or the binding of a new device. On the login side, it wants device ID logs reviewed for binding requests from odd locations, multiple accounts bound to one device, logins from several locations in a short window, and unusually long login sessions.

Third, incident response: contain, protect client assets, notify affected clients, and report to the SFC immediately. Fourth, client education on phishing.

One framing point matters for how firms brief their boards. This is an expectations circular, not subsidiary legislation. The word “must” appears exactly once in the whole document, at paragraph 22, and it is about suspending accounts when you spot something suspicious during the transition. Everything else is expressed as “should” or “expects”. That does not make it optional, for reasons we come to below, but it does change how you characterise it internally.

Who is in scope

The circular defines two populations in its footnotes.

“Internet brokers” means licensed corporations engaged in internet trading and licensed for Type 1, Type 2, Type 3, and/or Type 9 regulated activity, the last of those only to the extent they distribute funds under management through their own internet-based trading facilities. That definition tracks the SFC’s existing Cybersecurity Guidelines.

“SFC-licensed VASPs” currently means licensed virtual asset trading platform operators and nothing else, because Schedule 3B to the AMLO contains a single VA service: operating a VA exchange. As at the SFC’s list of 29 May 2026, there are 13 licensed platforms.

The circular is addressed to licensed corporations, which on its face leaves registered institutions (banks) outside it. However, the underlying Cybersecurity Guidelines reach persons licensed by or registered with the SFC. Nor is it resolved on the face of the text whether “SFC-licensed VASPs” captures the deemed-to-be-licensed applicants under Schedule 3G. If either question decides your position, seek advice rather than assume an answer.

The 12-month clock, and what is due before it

Only the authentication work gets the twelve months. Paragraph 21 expects firms to review notification, surveillance and incident-response arrangements and make the necessary enhancements immediately, with the SFC saying it will take “a pragmatic approach” on timing. Client education is “as soon as practicable”. Robust authentication is the item with the hard date of 8 July 2027, and there the circular adds that “large internet brokers are expected to implement these solutions immediately”.

Two points arise from this provision. The circular never defines a large internet broker, so if you are anywhere near the line, document the assessment you made and why. And on the face of the text, the immediate expectation is written for brokers, not for platforms. We would not build a compliance plan on that distinction, but it is a fair question to raise with your case officer.

During the transition, firms are expected to test before deployment, roll out to clients as soon as practicable, and communicate the change with proper support. If you think you will miss the date, paragraph 23 tells you to notify your case officer immediately. In our experience, firms that self-report early are more likely to be supervised, whereas firms that remain silent and miss the deadline are more likely to be investigated.

What “phishing-resistant” actually means

The reason SMS codes fail is not that the message can be read. It is that a phishing site can relay the code in real time. The 2025 attacks the SFC describes worked exactly this way: fraudsters sent SMS messages impersonating brokers, referencing purported information requests from regulators, and harvested credentials including the OTP on a fake site while running a man-in-the-middle attack against the real login. The code was valid. The problem was that nothing tied it to the genuine website.

Passkeys solve that with public-key cryptography. A private key lives on the client’s device, hardware security key or passkey manager, and it is registered to your domain specifically, so it simply will not produce a valid response to a lookalike site. The client unlocks it with biometrics or a PIN. There is nothing shared and nothing to phish. Device binding is the alternative route, where the device is linked to the account using robust verification. The Appendix is blunt that binding conducted with “weak verification methods, such as user login credentials and OTP-based authentication,” leaves firms exposed to unauthorised device registration, precisely the flow phishing defeats.

The single hardest requirement in the document is in the Appendix, and it is a procurement gate: whether you buy a passkey solution or build one, it “should be subject to appropriate certification, ie, FIDO certification”. Firms should request evidence of certification directly, rather than relying on marketing materials.

The practical checklist

Identify the owners. The circular names the Manager-in-Charge of Overall Management and Oversight and the Manager-in-Charge of Information Technology specifically, and both should be included in the board paper.

Scope every channel. Desktop application, mobile application and trading website each need an answer, and the web is the hardest case.

Design the enrolment journey around four client scenarios, because the Appendix does:

1. New clients: create a passkey during onboarding after identity verification.
2. Existing clients with a bound device: prompted to create a passkey after their next login.
3. Existing clients without a bound device, before the deadline: may still log in with ID, password and SMS OTP, then be prompted both to create a passkey and to bind the device.
4. Existing clients without a bound device, after 8 July 2027: must use one of the Appendix’s robust verification methods to create a passkey, an existing passkey via cross-device authentication, a live selfie checked against your own records, an identity document scan with a selfie match, or a visit to your office in person.

Use the carve-out. Clients whose devices are already bound do not have to rebind. For most active books, that turns a migration into an enrolment prompt.

Front-load it anyway. Every client you fail to migrate before July 2027 becomes a client who can only enrol through document verification or an office visit. If you have no retail premises, work out your answer to that now.

Then the housekeeping: cap enrolment at three passkeys and three devices with an assessment gate for exceptions; limit idle session timeout, the circular’s example is 30 minutes, and do not let clients switch it off; notify clients on successful login, new-device logins, device binding and passkey creation or revocation, across more than one channel; keep device ID logs and review them; control synchronisation risk, since the Appendix separately requires firms to mitigate the risk that software-based passkeys synced across a client’s device ecosystem (iCloud Keychain, Google Password Manager and similar) could be abused to extend unauthorised access; build the loss and recovery path before you need it.

The sentence about client losses

This is the paragraph compliance teams keep asking us about. The relevant paragraph is reproduced below. If a firm “fails to implement adequate measures to prevent, detect and stop large-scale unauthorised transactions conducted through client accounts following hacking incidents, the SFC will hold the relevant firm accountable for the losses suffered by its clients.”

Read it carefully. The words compensate, reimburse, indemnify and liable appear nowhere in the circular. This is a statement of supervisory posture, not a new compensation right, and it creates no private cause of action. It is also conditional and narrow: the trigger is large-scale unauthorised transactions following a hack, not any loss on any account.

While the SFC does not need a compensation rule, it has section 194 of the SFO (suspension, revocation, public reprimand, and a fine of up to HK$10 million or three times the profit gained or loss avoided), section 53ZSP of the AMLO for licensed platforms (which at section 53ZSP(3)(b) adds a power to order remedial action by a date the SFC fixes), the power to amend or impose licensing conditions at any time under section 116(6) of the SFO and section 53ZRK(4) of the AMLO, and restriction notices under sections 204 and 205. In November 2024 it used those last powers to freeze up to HK$91 million across four brokers after unauthorised trades through hacked accounts. The toolkit is not theoretical.

What your clients will notice

Codes disappear from the login screen, replaced by Face ID, a fingerprint, a PIN or a physical key. Registering a new phone becomes harder on purpose. Notifications increase. Sessions time out and cannot be disabled. Accounts get suspended faster when something looks wrong, because during the transition that is the one thing the circular says firms must do.

What does not change: clients still carry responsibility for not handing over credentials, and the circular gives them no new legal remedy. If a client loses money, the answer still runs through the client agreement, the general law, and the Financial Dispute Resolution Centre or the courts.

How TITUS helps

We work with licensed platforms and brokers on exactly this: reading the circular against your actual licence and business, deciding the grey-area questions (are you a “large internet broker”, are you an in-scope VASP), drafting the board paper and the implementation plan, reviewing vendor contracts and the certification position, updating client agreements and terms for the new authentication regime, and handling the conversation with your case officer if the timeline is tight.

If your implementation plan is not yet written, that is the piece to start with. It is also the first document the SFC will ask for.

Book a compliance review with our virtual assets and fintech team. We will map the circular against your current authentication stack and give you a dated plan you can put in front of your board. Book a consultation or contact us to get started.

Frequently asked questions

Does the SFC circular ban SMS one-time passwords entirely?

No. The restriction covers client login and device binding. OTPs can still be used elsewhere, and the circular itself contemplates SMS as a notification channel.

When is the deadline?

8 July 2027 for robust authentication, being twelve months from the circular’s date. Surveillance, incident response and client education are expected immediately or as soon as practicable, without the twelve-month runway.

Does the circular apply to banks?

It is addressed to licensed corporations and SFC-licensed VASPs. Registered institutions are regulated for e-banking security by the HKMA under a separate and differently shaped programme. If your group has both a bank and a licensed corporation, take advice rather than assuming one answer covers both.

Do existing clients have to re-register their devices?

No. The circular expressly says firms are not required to ask existing clients to rebind devices that are already bound.

If a client is hacked, does the platform have to repay them?

Not automatically. The circular says the SFC will hold a firm accountable for client losses where it failed to prevent, detect and stop large-scale unauthorised transactions after a hack. That is regulatory accountability. Whether a particular client recovers a particular loss is a separate question that turns on the client agreement and the general law.

Disclaimer: This article reflects our understanding of the position under Hong Kong law and applicable regulatory guidance as at 28 July 2026. The regulatory framework for virtual assets and licensed intermediaries continues to develop. It is subject to change, and the application of an SFC circular to a particular licensed business depends on its licence, its systems and its client base. Nothing in this article is, or should be taken as, legal advice or a recommendation on any specific matter or product.

TITUS Solicitors is a firm of solicitors qualified to practise in the Hong Kong Special Administrative Region of the People’s Republic of China. We do not solicit business in any jurisdiction in which we are not authorised to practise. This article is provided for information purposes only and is not directed at, or intended for distribution to or use by, any person in a jurisdiction where to do so would be contrary to applicable law or regulation.

Related: Crypto Scams in Hong Kong: What to Do If You’ve Been Defrauded or Your Account Is Frozen

The post SFC’s New Anti-Phishing Rules: What Hong Kong Virtual Asset Platforms Must Do in the Next 12 Months appeared first on Titus.

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The word “uncontested” trips people up, so let’s be clear about what it does and doesn’t mean.

What “uncontested” actually means

An uncontested divorce doesn’t mean you agree about everything in your marriage. It means you agree on three specific things: that the marriage should end, how your finances will be sorted, and the arrangements for any children. Settle those, and there’s nothing left for a judge to fight over. You’re asking the court to approve what you’ve worked out, not to decide it for you.

You can still disagree, sometimes sharply, and reach an uncontested divorce, as long as you bridge those gaps yourselves (often with your solicitors’ help, sometimes through mediation) before you ask the court to seal it.

How it runs, and how long it takes

The mechanics are light. You file the joint application or petition with your marriage certificate and, if you have children under 18, a statement of the arrangements for them. Because the divorce is undefended, it goes through the special procedure: a judge reviews the papers, and neither of you usually needs to attend a hearing on the divorce itself.

If the papers are in order, the court grants a decree nisi (the provisional order), and after a minimum six-week wait you apply for the decree absolute, which formally ends the marriage. Start to finish, an uncontested divorce commonly takes around four to six months. For the full mechanics, see our step-by-step guide to the Hong Kong divorce procedure.

Getting your agreement right

The part worth doing carefully is the agreement itself, because this is what protects you afterwards.

On finances, a loose verbal understanding is not enough. Agreed financial terms should be written up and submitted to the court as a consent order, so they’re binding and enforceable. People sometimes skip this to save a little now and pay for it later when an ex changes their mind. Don’t.

On children, under section 18 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) the court has to be satisfied the arrangements are satisfactory before the divorce can be made final, so think it through: where the children live, how the other parent stays involved, and how costs are shared.

This is where a solicitor earns their keep on an otherwise simple divorce: making sure what you’ve agreed is actually watertight, fair and properly recorded. Because the work is contained, a straightforward uncontested divorce is far more predictable on cost, and we’ll give you a clear written fee estimate before any work starts. Our guide to divorce costs sets out the ranges.

When “uncontested” quietly becomes contested

A word of realism. Plenty of divorces start amicably and stay that way. Some don’t. The usual flashpoints are money that turns out to be more tangled than expected, or a disagreement about the children that neither side will move on. If that happens, it doesn’t mean you’ve failed, it means a few issues need resolving properly. Catching it early, and getting advice before positions harden, is what keeps a wobble from becoming a war.

If you think your divorce can be amicable and you want to keep it that way, that’s exactly the kind of matter we like to make simple. Book a consultation or message us on WhatsApp, in confidence. We aim to reply the same business day.

This article is for general information only and is not legal advice. Every case turns on its own facts. For advice on your situation, speak to a qualified solicitor. Reading this article does not create a solicitor-client relationship.

Related insights

• Can You Divorce in Hong Kong If You Married Overseas? A Guide for International Couples
• our family & divorce law team

The post Uncontested Divorce in Hong Kong: The Faster, Calmer Route appeared first on Titus.

So the useful question isn’t “are prenups binding” (they’re not, automatically). It’s “what makes a Hong Kong court actually enforce one.” That’s answerable.

How Hong Kong got here

For a long time the assumption was that you couldn’t sign away the court’s power to divide your finances on divorce. That changed in approach when the Hong Kong Court of Final Appeal adopted the reasoning of the leading English case, Radmacher v Granatino.

The principle that came out of it: a court should give effect to a nuptial agreement that was freely entered into by both parties, with a full appreciation of its implications, unless in the circumstances it would not be fair to hold them to it. In other words, the agreement is a powerful factor, sometimes the decisive one, but the court keeps a backstop to prevent an unfair result.

What makes a prenup stand up

Four things do most of the work. If your agreement has all four, it’s in strong shape. If it’s missing one, that’s where the other side will attack.

First, both of you entered into it freely, without pressure. An agreement signed under duress, or sprung on someone days before the wedding, is vulnerable. Give it time and breathing room.

Second, full and honest financial disclosure. Each of you has to know what the other actually has. You can’t make an informed decision to give something up if you don’t know what’s on the table, and a court won’t enforce an agreement built on a hidden balance sheet.

Third, independent legal advice. Each party should have their own solicitor, separately. This isn’t a box-ticking exercise. It’s the clearest evidence that you both understood what you were agreeing to and what you were giving up.

Fourth, a clear understanding of the implications, and an outcome that isn’t unfair. Even a perfectly executed agreement can be set aside if enforcing it would leave one spouse in real need, or if it ignores the needs of children who came along later. The court won’t let a prenup create real hardship.

Postnuptial agreements work too

If you’re already married, you haven’t missed the boat. A postnuptial agreement, made after the wedding, is treated on the same principles. Couples reach for them after a windfall, before going into business, or simply because the conversation that didn’t happen before the wedding feels overdue. The same four ingredients apply.

When the court will depart from a prenup

It helps to be realistic about the limits. A Hong Kong court is most likely to step away from a prenup where enforcing it would be unfair: where one spouse would be left unable to meet their needs, where children’s needs aren’t met, or where circumstances have changed so much since signing that holding the parties to the old deal makes no sense. The agreement isn’t a magic shield. It’s a strong starting point that the court will respect if it’s fair and properly made.

Why DIY prenups fail

The template you found online fails on the things above. It usually has no independent legal advice on either side, vague or absent financial disclosure, and wording that doesn’t fit Hong Kong law. It may have been signed in a rush. Each of those is a crack, and the spouse who wants out of the agreement only needs one.

A prenup is one of the most effective tools there is for protecting pre-marital wealth, a family business or inherited assets, but only if it’s built to hold. If that’s what you’re trying to protect, our guide on high-net-worth divorce and asset protection goes into the bigger-money picture.

If you’re getting married, or recently did, and you’ve got assets worth protecting, the time to sort this is now, calmly, not later under pressure. Book a consultation or message us on WhatsApp. Every conversation is confidential, and we aim to reply the same business day.

This article is for general information only and is not legal advice. The enforceability of any agreement depends on its drafting and the circumstances. For advice on your situation, speak to a qualified solicitor. Reading this article does not create a solicitor-client relationship.

Related insights

• Spousal Maintenance in Hong Kong: How It’s Calculated
• Hong Kong Divorce Procedure: A Step-by-Step Guide
• our family & divorce law team

The post Are Prenuptial Agreements Binding in Hong Kong? appeared first on Titus.

What the court does have is a list of factors it must weigh. Once you understand those, the range of likely outcomes stops feeling random.

What the court actually weighs

When deciding whether one spouse should support the other, and how much, the court works through the factors set out in the Matrimonial Proceedings and Property Ordinance (Cap. 192). In plain terms, it looks at:

• the income, earning capacity, property and financial resources each of you has or could realistically have
• the financial needs and responsibilities each of you will carry, now and in the foreseeable future
• the standard of living the family enjoyed before the breakdown
• your ages, and how long the marriage lasted
• any physical or mental disability
• the contributions each of you made, including looking after the home and raising children
• in some cases, conduct, where it would be unfair to ignore it

The thread running through all of it is need and fairness, measured against what the marriage actually looked like. A long marriage where one spouse gave up a career to raise children, with a lower chance of rebuilding that career, points to more generous, longer support than a short marriage between two earners.

The different kinds of maintenance

“Maintenance” covers a few different things, and they do different jobs.

Maintenance pending suit is support while the divorce is ongoing, to keep things stable until the final order. Periodical payments are ongoing support after the divorce, usually monthly. A lump sum is a one-off payment, sometimes used instead of, or alongside, ongoing payments. The court can also order a transfer of property, for example the family flat.

There’s also something called nominal maintenance: a token order, often a notional dollar a year, that keeps the door open so the receiving spouse can come back to the court later if their circumstances change badly. It’s a safety net, not income.

Clean break, or ongoing support?

Hong Kong courts will consider a clean break, where the financial ties are severed in one go, usually through a lump sum or property transfer, so neither party depends on the other going forward. Unlike in England, there’s no statutory rule requiring the court to aim for one, but in practice it often will where that’s achievable. Many people prefer it: no monthly reminder of the marriage, no fighting about payments years later.

But a clean break isn’t always realistic. If one spouse can’t meet their needs without ongoing help, the court won’t force a break that leaves them stranded. Often the answer is a blend: a lump sum plus periodical payments for a defined period while the receiving spouse retrains or returns to work.

When maintenance ends, and when it can change

Periodical maintenance isn’t necessarily forever. It usually ends on the receiving spouse’s remarriage, or on the death of either party. It can also be set to run for a fixed term.

It can also be varied. Under the court’s power to revisit periodical payments, either party can apply to change the amount if circumstances change materially: the paying spouse loses their job, the receiving spouse’s income jumps, a serious illness arises. A lump sum or property transfer, by contrast, is generally final and can’t simply be reopened because circumstances later change.

This is worth keeping in mind on both sides. If you’re paying, a genuine change in your finances may be a reason to apply to reduce the order rather than just falling behind. If you’re receiving, the order isn’t necessarily locked forever.

A realistic expectation

If you’re trying to plan, the honest position is this: the outcome depends on the gap between your needs and your resources, the length of the marriage, and what each of you contributed. Two cases with similar headline incomes can land in very different places once those factors are applied. For higher-value or cross-border situations, the analysis is more involved again, and our guide on high-net-worth divorce and asset protection goes further.

The most useful thing we can do is look at your actual numbers and give you a realistic range rather than a guess. Book a consultation or message us on WhatsApp, in confidence. We aim to reply the same business day.

This article is for general information only and is not legal advice. Maintenance outcomes depend heavily on the facts of each case. For advice on your situation, speak to a qualified solicitor. Reading this article does not create a solicitor-client relationship.

Related insights

• How Much Does a Divorce Cost in Hong Kong?
• Hong Kong Divorce Procedure: A Step-by-Step Guide
• our family & divorce law team

The post Spousal Maintenance in Hong Kong: How It’s Calculated appeared first on Titus.

Here’s how a divorce actually runs in Hong Kong, from the first question to the final decree.

First: can you even apply here?

Two things decide whether you can start a divorce in Hong Kong.

One is time. You generally can’t petition in the first year of marriage. Under section 12 of the Matrimonial Causes Ordinance (Cap. 179), a divorce petition can’t be presented within twelve months of the wedding, except in cases of exceptional hardship or exceptional depravity. You can still rely on a separation that began during that first year.

The other is connection to Hong Kong. A Hong Kong court can deal with your divorce if either spouse was domiciled in Hong Kong when the case is filed, was habitually resident here for the three years before filing, or has a substantial connection with Hong Kong (section 3 of Cap. 179). For most people living and working here, that last one is easily met. If you married abroad or one of you has since left Hong Kong, it’s worth checking early, because where you file can change the financial outcome.

The one ground, and the five facts

Hong Kong has a single ground for divorce: that the marriage has broken down irretrievably. You prove that breakdown with one of five facts under section 11A: adultery that you find it intolerable to live with, behaviour you can’t reasonably be expected to live with, desertion for at least a year, one year’s separation with both parties’ consent, or two years’ separation without consent.

In practice, most divorces use unreasonable behaviour, one year’s separation with consent, or two years’ separation without consent. Whenever possible, the separation routes are preferred as there is no allegation of fault, although these rely on the fact that the parties have in fact separated.

Sole petition or joint application?

You have two ways in.

A sole petition is where one spouse (the petitioner) makes the application to the Court and the other (the respondent) responds. A joint application is where both of you apply together, which Hong Kong allows where you agree on the divorce. Functionally, both options are very similar, especially because a joint application still has a requirement of 1 year of separation or a notice filed 1 year prior to the application. However, some parties feel that the path of the joint application is less antagonistic, because there is no serving of papers from one party to another.

Step by step, once you file

For an uncontested case, the path looks like this.

You (or both of you) file the petition or joint application at the Family Court, along with your marriage certificate and, if you have children under 18, a statement setting out the arrangements for them. Under section 18 of the Matrimonial Proceedings and Property Ordinance (Cap. 192), the court has to be satisfied that the arrangements for any children are satisfactory, or the best that can be devised, before the decree nisi can be made absolute. So this part matters.

If the divorce is undefended, it goes through what’s known as the special procedure. Neither of you usually has to attend a hearing on the divorce itself. A judge reviews the papers, and if everything is in order, the court grants a decree nisi. That’s a provisional order. It says the court is satisfied the marriage has broken down, but you’re not divorced yet.

After the decree nisi, there’s a minimum six-week wait. Once that’s passed, the applicant can apply for the decree absolute, the final order that actually ends the marriage. When that’s granted, you’re divorced.

The finances and the children are dealt with alongside this, not after it. If you’ve agreed everything, your agreement can be turned into a consent order the court approves. If you haven’t, those issues run on their own track (financial dispute resolution, and if needed a hearing), which is what turns a divorce from uncontested into contested.

How long does it take?

An uncontested divorce in Hong Kong commonly takes around four to six months from filing to decree absolute, assuming the paperwork is clean and the children’s arrangements are agreed. A contested case, where finances or children are fought over, takes much longer, often two to three years.

The single biggest lever on the timeline is agreement. Every issue you settle directly is one the court doesn’t have to. For a sense of what the process costs at each level, see our guide on how much a divorce costs in Hong Kong.

Where it gets more complicated

The clean version above assumes a fairly straightforward situation. Real life has wrinkles: a spouse overseas who needs to be served, assets or property in more than one country, a family business, or a disagreement about the children that you can’t bridge alone. Each of these changes the work involved, and some change the strategy. If you married overseas or your finances cross borders, our guide on divorcing in Hong Kong when you married overseas is a useful next read.

If you’re at the start of this and not sure which route fits your situation, that’s exactly what a first consultation is for. Book a consultation or message us on WhatsApp, in strict confidence. We aim to reply the same business day.

This article is for general information only and is not legal advice. Procedures and time limits can change, and every case turns on its own facts. For advice on your situation, speak to a qualified solicitor. Reading this article does not create a solicitor-client relationship.

Related insights

• Uncontested Divorce in Hong Kong: The Faster, Calmer Route
• My Spouse is Abroad: How Does the HK Divorce Process Work?
• Global Assets, Local Laws: Who Gets the Overseas Property?
• our family & divorce law team

The post Hong Kong Divorce Procedure: A Step-by-Step Guide appeared first on Titus.

That’s the part most people don’t realise when they start Googling. The court’s own fees are modest. The cost is in the fight. So before you worry about lawyers’ rates, it’s worth understanding what actually drives the bill, because a lot of it is within your control.

The court fees are the small part

Let’s start with the fixed costs, because they’re the easy bit.

Filing a divorce petition with the court costs HK$630. Along the way there are smaller fees for filing things like financial statements and the application for the final order, which together usually add a few hundred to around a thousand dollars. The final decree itself carries a small fee too.

So the government’s share of an uncontested divorce is, very roughly, somewhere under HK$2,000. If court fees were the whole story, divorce would be cheap. They aren’t the whole story, because almost everyone who divorces uses a solicitor, and that’s where the real numbers live.

(Court fees are set by the Judiciary and change from time to time. Check the current Family Court fee schedule, or ask us, for today’s figures.)

Uncontested divorce: the affordable end

An uncontested divorce is one where both of you agree on everything that matters: that the marriage is over, how the finances are split, and the arrangements for any children. You’re not asking the court to decide anything. You’re asking it to approve what you’ve already worked out.

For a case like this, solicitor fees in Hong Kong typically run from around HK$30,000 to HK$50,000, with genuinely simple cases sitting at the lower end. If there are no children, no property to divide and no maintenance to argue about, you’re usually looking at the bottom of that range. Add a flat to split or maintenance to sort out, and it moves up.

If your divorce can be amicable, keep it amicable. It’s not just less painful. It’s the cheapest legal decision you’ll make.

Contested divorce: where it gets expensive

A contested divorce is the opposite. You disagree about the grounds, or the money, or the children, and the court has to step in and decide.

Here the range opens up dramatically: total legal costs for a contested matter can easily extend to millions in fees. The reason is simple. Family cases are billed largely by the hour, and every disagreement generates work: letters, financial disclosure, affidavits, court hearings, sometimes expert evidence on the value of a business or a property.

Many firms also ask for money on account at the start, often in the region of HK$25,000 to HK$50,000, before work begins. None of that is unusual. It’s just the cost of a process that runs on people’s time.

The uncomfortable truth is that two people can spend significant assets fighting over assets worth less than the combined legal bill. We’ve seen it. Part of our job is to tell you, early and honestly, when that’s the road you’re on.

So what actually drives the cost?

If you take one thing from this, take this: the size of your bill is decided mostly by how the divorce is run, not by which firm you pick. A few factors move the needle more than anything else.

Conflict is the big one. Every issue you can agree directly, rather than through solicitors and the court, is money saved. Children and finances are where disputes concentrate and where costs climb fastest.

Complexity is the next. A salaried couple with a rented flat is a different job from a couple with a company, a trust, property in three countries and a prenup to argue about. Cross-border assets in particular take time to untangle, and where you file can change the whole financial picture. If that’s your situation, our guide on divorcing in Hong Kong when you married overseas is worth a read.

And then there’s how reasonable both sides are willing to be. This is the one nobody likes to hear, because you only control your own half of it. But a client who picks their battles, discloses honestly and stays focused on the outcome will almost always pay less than one who treats every email as a war.

How to keep the cost down

A few practical things genuinely help.

Try mediation before you litigate. A neutral mediator can help keep discussions and negotiation focused on the relevant points that need to be agreed, and if an agreement can be reached, would be far cheaper than two sets of solicitors arguing the same points in court. It won’t suit every case, especially where there’s been abuse or a serious imbalance of power, but where it works it works well.

Get your paperwork in order before the first meeting. The faster your solicitor understands your finances, the less time, and less of your money, gets spent piecing it together. Bank statements, property documents, details of any business interests: have them ready.

Agree what you can, narrow what you can’t. You don’t have to settle everything to save money. Every issue you take off the table shrinks the dispute and the bill.

A straight answer

If your divorce is genuinely uncontested, budget a few tens of thousands and you’ll likely be fine. If it’s contested, the honest range is wide, and the most useful thing we can do at the outset is give you a realistic estimate for your situation rather than a number off a website.

That’s really the point of a first conversation. At TITUS we offer a fixed-fee initial consultation, so you can find out where you stand, and what it’s likely to cost, before committing to anything. If you’d like to talk it through in confidence, book a consultation or message us on WhatsApp. We aim to reply the same business day.

This article is for general information only and is not legal advice. Costs vary with the facts of each case, and court fees change over time. For advice on your situation, speak to a qualified solicitor. Reading this article does not create a solicitor-client relationship.

Related insights

• Uncontested Divorce in Hong Kong: The Faster, Calmer Route
• Hong Kong Divorce Procedure: A Step-by-Step Guide
• Spousal Maintenance in Hong Kong: How It’s Calculated
• our family & divorce law team

The post How Much Does a Divorce Cost in Hong Kong? appeared first on Titus.

For a very early, pre-seed or seed Hong Kong startup that wants a fast, low-cost raise and no debt on the balance sheet, a SAFE is usually the cleaner choice. For a startup with some traction, or an investor who wants the protection of interest and a maturity date, a convertible note is often more appropriate. Both defer the valuation question to a later priced round — the real difference is debt versus a non-debt right to future equity.

Need help deciding? TITUS advises founders on both — see our startup investment practice.

What is a SAFE and what is a convertible note?

A SAFE (Simple Agreement for Future Equity) is an investment contract that gives the investor the right to receive shares in the future on a triggering event, typically the next qualifying equity round or a liquidity event. A SAFE is not a loan: it carries no interest and no maturity date, and it does not sit on the balance sheet as debt. Our deep-dive explains the mechanics in SAFE: everything you need to know.

A convertible note (or convertible loan note) is short-term debt that converts into equity at a future round. It usually carries an interest rate and a maturity date; if it has not converted by maturity, it may need to be repaid or renegotiated. See our overview, What is a convertible note?.

Both instruments commonly use a valuation cap (a ceiling on the conversion valuation) and/or a discount (a reduction on the price new investors pay), so the early investor is rewarded for backing the company sooner.

How do SAFEs and convertible notes actually differ?

The core differences come down to four things.

1. Debt or not. A convertible note is a debt instrument: it creates a repayment obligation and usually accrues interest. A SAFE is not debt; nothing is “owed” unless and until it converts.

2. Interest and maturity. Convertible notes typically carry interest (often a single-digit annual rate) and a maturity date. SAFEs have neither, which is why founders often prefer them. In Hong Kong, it is common to see convertible loan notes that are interest-free until maturity or a default event, with maturity terms often negotiated between one and two years (a general market observation, not a legal rule).

3. Conversion trigger. A SAFE usually converts at any qualifying equity financing. A convertible note often requires the company to raise a minimum amount before automatic conversion, and the maturity date adds a hard deadline.

4. Downside on a stalled raise. If the next round never happens, a SAFE simply sits there (subject to its terms on a dissolution or liquidity event). A convertible note can fall due at maturity, which creates real pressure: repayment, extension, or conversion at a default valuation.

For how these instruments interact with founder equity and team incentives, see our notes on vesting agreements and ESOPs.

Are SAFEs and convertible notes valid under Hong Kong law?

Both instruments are used in Hong Kong, but they must be tailored to the Hong Kong Companies Ordinance (Cap. 622) and, where relevant, the Securities and Futures Ordinance (Cap. 571), not dropped in from a US template. A few practical points:

• A Hong Kong company’s share issuance, conversion mechanics, and authority to allot shares need to work under Cap. 622 and the company’s articles. Convertible note issuance is commonly approved by board resolution and, where required, by shareholders.
• US-standard SAFE forms assume Delaware-style preferred stock and concepts that do not map cleanly onto Hong Kong company law, so a SAFE used here should be adapted for a Hong Kong company.
• Offering interests to investors can engage Hong Kong securities and prospectus rules; how you raise, and from whom, matters. Get regulatory and corporate and commercial advice before you circulate documents.

The headline message: the instrument is only as good as its drafting under Hong Kong law.

Should a Hong Kong startup use a SAFE or a convertible note?

A SAFE tends to suit you if: you are pre-seed or seed and want speed and low legal cost; you do not want debt or a maturity deadline hanging over the company; or your investors are comfortable with a non-debt instrument.

A convertible note tends to suit you if: you have some traction and a clearer path to a priced round; your investors want downside protection such as interest accrual, a maturity date, and creditor status; or you expect a defined near-term raise that will trigger conversion.

There is no universally “better” instrument. It depends on stage, investor expectations, and how much certainty each side wants. And the terms that actually drive outcomes (valuation cap, discount, conversion triggers, and what happens at maturity or on exit) matter far more than the label.

Comparison table: SAFE vs convertible note

General comparison only; individual deals vary. Verify legal characterisation and statutory references with current Hong Kong law.

Frequently asked questions

Is a SAFE debt or equity in Hong Kong? A SAFE is generally structured as neither a conventional loan nor present equity — it is a contractual right to receive shares in the future. It is not intended to be a debt instrument, which is a key difference from a convertible note. How it is treated for accounting and tax should be confirmed with your advisers on the specific terms.

Does a convertible note have to charge interest? Not necessarily. In Hong Kong it is common, as a matter of commercial practice rather than any legal rule, to see convertible loan notes that are interest-free until maturity or a default event, with interest then accruing. Whether to charge interest, and at what rate, is a commercial negotiation rather than a legal requirement.

What is a valuation cap and a discount? A valuation cap sets the maximum valuation at which the investment converts into equity, protecting the early investor if the company’s valuation rises sharply. A discount lets the investor convert at a lower price per share than new investors in the round. Where both apply, investors usually get whichever gives the better (lower) conversion price, unless the instrument provides that the cap and discount are combined — so check the specific drafting.

What happens to a convertible note if we never raise a priced round? Because a convertible note has a maturity date, it can become repayable if conversion has not been triggered by then. In practice the parties often negotiate an extension, a conversion at a default valuation, or repayment. This deadline risk is one of the main reasons some founders prefer a SAFE.

Can we use a US SAFE template for a Hong Kong company? You can start from one, but it should be adapted. US SAFEs assume Delaware-style preferred stock and US concepts that do not translate directly into Hong Kong company law. The conversion and share-issuance mechanics need to work under the Companies Ordinance (Cap. 622) and your company’s articles.

How does this affect founder dilution? Both instruments dilute founders when they convert, and the valuation cap and discount determine how much. Modelling the conversion at the next round — alongside any ESOP pool and vesting arrangements — is essential before you sign.

Which do Hong Kong investors prefer? It varies. Some early-stage investors are comfortable with SAFEs; others prefer the creditor protection of a convertible note. The right answer is the one your actual investors will sign — which is why getting the term sheet right early saves time and cost.

How TITUS helps founders

TITUS works with Hong Kong founders from the first term sheet onward: choosing between a SAFE, a convertible note, or a priced round; adapting instruments to the Companies Ordinance and your company’s articles; negotiating valuation caps, discounts, and conversion mechanics; and joining the dots with cap-table planning, ESOPs, and vesting. We keep the documents lean, founder-aware, and enforceable under Hong Kong law.

Raising soon? Get your instrument right before it goes to investors: Book a consultation or contact us.

This article is general information only and is not legal advice. It reflects our understanding of Hong Kong law as at the date of writing and may not reflect later changes. You should obtain specific advice before acting. For advice on startup financing in Hong Kong, contact TITUS Solicitors.

The post SAFE vs Convertible Note: Which Is Better for a Hong Kong Startup? appeared first on Titus.

For most open-ended, securities-trading strategies — hedge funds, multi-asset, and retail-style products — Hong Kong fund managers choose the Open-ended Fund Company (OFC), a corporate vehicle with variable capital. For closed-end private equity and venture capital strategies with capital commitments and drawdowns, the Limited Partnership Fund (LPF) is usually the better fit. Both can access Hong Kong’s profits tax exemption for funds, and both can offer a credible onshore alternative to a Cayman vehicle.

If you want a structuring view tailored to your strategy, speak to TITUS about our investment funds practice.

What is the difference between an OFC and an LPF?

The two regimes solve different problems.

An OFC is an investment fund set up as a Hong Kong company with limited liability and variable share capital, so shares can be issued and redeemed as investors come and go. That open-ended flexibility makes it the natural home for liquid, tradeable strategies. The OFC has the SFC as its primary regulator and is incorporated at the Companies Registry; the regime came into effect on 30 July 2018. For a deeper walkthrough, see our OFC guide.

An LPF is a fund constituted as a limited partnership under the Limited Partnership Fund Ordinance (Cap. 637), which took effect on 31 August 2020. It has one general partner (GP) with unlimited liability for the fund’s debts and at least one limited partner (LP) whose liability is capped at its commitment. That structure mirrors the global private equity and venture capital model: capital commitments, drawdowns, and waterfall distributions. Our the full Hong Kong LPF setup guide covers the mechanics in detail.

In short: OFC = open-ended corporate vehicle for liquid strategies; LPF = closed-end partnership for private capital.

How is an OFC structured?

An OFC is its own legal person and must have, broadly:

• A board of at least two natural-person directors, including at least one independent director (the independent director must not be a director or employee of the custodian).
• An investment manager licensed or registered with the SFC for Type 9 (asset management) regulated activity. This is a hard requirement — the OFC cannot self-manage without a Type 9 manager.
• A custodian to hold the scheme property.
• An auditor independent of the directors, manager, and custodian.

An OFC can be set up as a single fund or as an umbrella with multiple sub-funds, with segregation of assets and liabilities between sub-funds. It can be publicly offered (subject to SFC product authorisation) or privately offered.

For how this sits within Hong Kong’s wider regulatory framework, read on.

How is an LPF structured?

An LPF is built around the GP/LP relationship:

• One general partner, which can be a natural person aged 18 or above, a Hong Kong private company, a registered non-Hong Kong company, a re-domiciled company, a limited partnership registered under the Limited Partnerships Ordinance (Cap. 37), another registered LPF, or a non-Hong Kong limited partnership with or without legal personality. If the GP is another LPF or a non-Hong Kong limited partnership without legal personality, an authorised representative is also required. The GP has unlimited liability and ultimate responsibility for managing the fund.
• At least one limited partner, whose liability is limited to its agreed commitment, provided the LP does not take part in management.
• An investment manager appointed to carry out day-to-day investment management. The manager must be a Hong Kong resident individual (18+), a Hong Kong company, or a registered non-Hong Kong company.
• A responsible person for anti-money laundering / counter-terrorist financing functions under the AMLO (Cap. 615) — this must be an authorised institution, a licensed corporation, an accounting professional, or a legal professional.

An LPF application must be filed by a Hong Kong solicitor or a Hong Kong law firm on behalf of the proposed GP, and the LPF is registered with the Companies Registry (the SFC does not register the vehicle). The partnership agreement governs the commercial terms, and it carries a high degree of contractual freedom.

If you are weighing a fund vehicle against direct co-investment or other private investment structures, our funds and private investment vehicles guide is a useful companion.

How are OFCs and LPFs taxed in Hong Kong?

Hong Kong applies profits tax on a territorial basis. The standard rates under the two-tiered regime are 8.25% on the first HK$2 million of a corporation’s assessable profits and 16.5% above that. Qualifying funds may be exempt from profits tax on exempt profits if the relevant statutory conditions are satisfied, principally under the following two reliefs:

1. Unified fund exemption (DIPN 61). Hong Kong’s unified fund tax exemption (effective from 1 April 2019, with IRD guidance in DIPN 61) can exempt a qualifying “fund” from profits tax on profits from qualifying transactions in specified assets (broadly securities, futures, OTC derivatives, FX and other Schedule 16C asset classes), plus limited incidental transactions (subject to a 5% incidental-transactions cap measured against total trading receipts from qualifying and incidental transactions). The exemption is structure-neutral: it can apply to OFCs, LPFs, and offshore funds, provided the statutory conditions are met. Anti-avoidance rules apply where a fund holds or controls private companies with significant short-term or Hong Kong immovable assets.

2. Carried interest tax concession. Eligible carried interest from qualifying private equity transactions can attract a 0% profits tax rate and a 100% exclusion from salaries tax for qualifying employees, under the concession introduced by the Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Ordinance 2021, which applies to eligible carried interest received or accrued on or after 1 April 2020. Conditions typically include the fund being an LPF or SFC-authorised fund, an SFC Type 9 manager, substantive Hong Kong activity (commonly framed as at least two qualified full-time employees and at least HK$2 million of qualifying Hong Kong operating expenditure), and HKMA certification (under Schedule 16D to the Inland Revenue Ordinance). See our carried interest concession explainer.

One practical point. The carried interest concession is built around private equity and LPF-style funds, so it tends to favour the LPF for PE and VC carry. Always take Hong Kong tax advice on eligibility before relying on either relief.

When should you choose an OFC vs an LPF?

Choose an OFC if: you run an open-ended, liquid strategy (hedge fund, multi-asset, long-only) where investors subscribe and redeem; you want a corporate vehicle and limited liability for the fund itself; or you may want a publicly offered, SFC-authorised retail product, or an umbrella with multiple sub-funds.

Choose an LPF if: you run a closed-end private equity, venture capital, private credit, or real assets strategy; you want the familiar GP/LP commitment-and-drawdown model and waterfall economics; or you want to position carried interest for the 0% concession.

Many managers run both over time. An LPF for a flagship PE fund, say, and an OFC for a liquid sleeve.

How do OFC and LPF compare to a Cayman fund?

Cayman remains the default for many global managers because of its deep service ecosystem, investor familiarity, and tax neutrality. Hong Kong’s pitch is onshore substance plus competitive tax: local regulation, the unified fund exemption, the carried interest concession, government grants toward set-up costs (up to 70% of eligible costs, capped at HK$300,000 for a publicly offered OFC and HK$150,000 for a privately offered OFC, with a maximum of one OFC per investment manager; the scheme is extended until 9 May 2027 subject to the available funding pool and SFC’s case-by-case approval), and a re-domiciliation pathway that lets an offshore corporate fund migrate to Hong Kong as an OFC without changing its legal personality.

The right answer depends on your investor base, where your team and substance sit, and your tax footprint. It is a fact-specific decision, best taken with corporate and commercial and tax advice.

Comparison table: OFC vs LPF vs Cayman fund

This table is a general comparison only and simplifies several technical conditions. Verify all entries with current law and Hong Kong tax advice.

Frequently asked questions

Do I need an SFC licence to set up an OFC or LPF? An OFC must appoint an investment manager that is licensed or registered with the SFC for Type 9 (asset management). An LPF does not itself require SFC registration, but if you carry on a regulated activity in Hong Kong — including asset management — you will generally need the relevant SFC licence.

Can an LPF or OFC be tax-exempt in Hong Kong? Both can potentially access the unified fund exemption (DIPN 61) on profits from qualifying transactions, if the statutory conditions are met. Exemption is not automatic and depends on the assets traded and how the fund is structured. Take Hong Kong tax advice before relying on it.

Which structure is better for a private equity or venture capital fund? The LPF is usually the better fit for closed-end PE and VC strategies because it mirrors the global GP/LP model and is the structure best aligned with the carried interest 0% concession. An OFC can be used for closed-end strategies too, but the partnership form is more familiar to PE and VC investors.

Can I move my Cayman fund to Hong Kong? Hong Kong has a re-domiciliation pathway that allows certain offshore corporate funds to migrate and re-register as an OFC without changing legal personality. The detailed eligibility and process should be checked before you commit.

How long does it take to set up an OFC or an LPF? Timelines vary with the strategy, documents, and regulator engagement. An LPF registration through the Companies Registry can be relatively quick once documents are ready; an OFC involves SFC registration and, for public offerings, product authorisation, which takes longer. We will give you a realistic timeline at the outset.

Who can be the general partner of an LPF? The GP can be a natural person, a Hong Kong private company, a limited partnership, or another registered LPF, and bears unlimited liability for the fund. Most sponsors use a special-purpose Hong Kong company as the GP to ring-fence liability.

Does an LPF need a Hong Kong law firm to register? Yes. An LPF registration application must be filed with the Companies Registry by a Hong Kong solicitor or a Hong Kong law firm acting for the proposed general partner. TITUS can act in that capacity.

How TITUS helps fund managers

TITUS advises sponsors, managers, and family offices on setting up and running Hong Kong funds: choosing between an OFC, an LPF, and an offshore vehicle; preparing constitutional and offering documents; filing LPF registrations with the Companies Registry; coordinating SFC licensing and OFC registration; and structuring for the unified fund exemption and the carried interest concession. We act as the filing law firm for LPFs and work alongside your tax advisers throughout.

Book a consultation to map the right structure for your strategy: Book a consultation or contact us.

This article is general information only and is not legal or tax advice. It reflects our understanding of Hong Kong law as at the date of writing and may not reflect later changes. You should obtain specific advice before acting. For advice on Hong Kong fund structures, contact TITUS Solicitors.

Related insights

• The New Limited Partnership Fund Regime in HK

The post OFC vs LPF: Choosing a Hong Kong Fund Structure appeared first on Titus.