Partnership Agreement

A Partnership Agreement in Hong Kong is a legally binding contract that defines the relationship between two or more individuals or entities engaging in a business venture for profit. It outlines the structure, duties, profit-sharing arrangements, and exit strategies of the partners. Governed by the Partnership Ordinance (Cap. 38), this agreement plays a vital role in clarifying the terms of engagement and preventing future disputes. It applies to both general and limited partnerships and is highly recommended even if the partners share a personal relationship.
In Hong Kong, you can operate under a General Partnership, Limited Partnership (LP), or Limited Liability Partnership (LLP). Each type offers different levels of liability protection and administrative requirements. For formal registration guidance, you may refer to the Companies Registry.

A properly drafted Partnership Agreement in Hong Kong should contain comprehensive clauses that address all aspects of the business relationship. Key clauses include:

These clauses form the legal foundation of a well-structured Partnership Agreement under Hong Kong commercial law.

While a Partnership Agreement helps define roles and responsibilities, it does not provide limited liability protection. In a General Partnership, all partners are personally liable for the debts and obligations of the business.

To protect your personal assets more effectively, consider forming a Limited Partnership (LP) or Limited Liability Partnership (LLP), both available under Hong Kong law. These structures, when combined with a detailed Partnership Agreement in Hong Kong, can significantly reduce personal risk.

In Hong Kong, partnerships are treated as pass-through entities for tax purposes. This means the partnership itself does not pay profits tax. Instead, each partner is taxed individually on their share of income.

Profits and losses should be clearly defined in the Partnership Agreement. Each partner is responsible for reporting their earnings in compliance with the Inland Revenue Ordinance. Maintaining accurate accounting records is crucial to avoid disputes and penalties. Selling goods or products under your partnership? Download the Sales Contract to protect your commercial transactions and comply with Hong Kong commercial practices.

Yes, even if you are launching a business with close friends or family, a Partnership Agreement is essential. Informal arrangements often lead to misunderstandings or disputes over contributions, roles, or profit sharing.
A written agreement clearly defines expectations, duties, ownership stakes, and dispute resolution procedures. It also serves to protect personal relationships by minimizing the chance of conflict due to business-related issues. Working with external consultants or specialists? Download the Shareholders Agreement to clearly define roles, payment, and project scope with your collaborators.

A breach of the Partnership Agreement can occur in many ways: violating the non-compete clause, misusing funds, failing to meet obligations, or leaking confidential information. If a breach occurs, the agreement typically allows for:

Hong Kong courts uphold clearly defined breach clauses under contract law. To be enforceable, ensure your agreement includes detailed consequences for violations.

Yes, a Partnership Agreement can be amended at any time as long as all partners agree in writing. The original contract should include a clause explaining how amendments can be made.

Changes must be documented formally and signed by all parties. Verbal changes or informal side agreements carry no legal weight in Hong Kong. Updated versions should include dates and any new appendices if applicable.

A Partnership Agreement provides several key benefits for business owners in Hong Kong:

By putting expectations in writing, the agreement safeguards both the business and the personal relationships of those involved. For small businesses, it adds professionalism and structure from day one.

Under Hong Kong’s Partnership Ordinance, if there is no written agreement, profits and losses are shared equally by default. However, this can be modified in the Partnership Agreement. Your agreement should clearly define:

This clarity helps partners manage expectations and align their financial goals, while also supporting accurate tax filings and regulatory compliance.

For companies and entrepreneurs operating in Hong Kong, having a professionally drafted Partnership Agreement is essential to structure roles, secure responsibilities, and manage profit sharing between partners. It also helps prevent conflicts and ensures that your business complies with local legal requirements. If you require assistance in drafting or reviewing your Partnership Agreement, Themis Partner provides documents prepared by experienced corporate lawyers. Download today your Partnership Agreement to ensure your partnership is legally compliant, clearly defined, and fully protected under Hong Kong law.