Our Insight
Offshore vs Onshore: How Sponsors Should Choose Jurisdiction
Summary: A pragmatic guide for sponsors weighing Hong Kong LPFs against Cayman and BVI vehicles. Includes a comparison table and real-world use cases.
Content
When launching a private investment fund, choosing the right jurisdiction isn’t just a legal formality—it’s a strategic decision that shapes investor confidence, operational efficiency, and long-term scalability. At Shirley Choi & Co., we’ve advised on over 500 fund structures across Hong Kong, Cayman Islands, and the British Virgin Islands. Here’s our pragmatic guide to help sponsors weigh their options.
Investor Familiarity
Institutional investors often default to offshore jurisdictions like Cayman or BVI due to their global recognition and longstanding use in fund structuring. These vehicles are familiar to LPs, administrators, and custodians worldwide.
- Cayman LPs are widely accepted by US, EU, and Asia-based investors.
- Hong Kong LPFs, while growing in popularity, may still require investor education—especially for cross-border fundraising.
Setup Speed & Flexibility
| Jurisdiction | Setup Speed | Flexibility in Structure |
|---|---|---|
| Hong Kong LPF | 3–5 business days | High |
| Hong Kong OFC | 4 weeks | High |
| Cayman | 2 days to 2 weeks | High |
| BVI | 1–2 weeks | Moderate |
Hong Kong LPFs benefit from fast registration via the Companies Registry, but offshore jurisdictions offer more structural options (e.g. Exempted Companies, SPCs, ELPs).
Costs & Government Fees
Initial setup and ongoing maintenance costs vary widely by jurisdiction and can influence a sponsor’s choice—especially for first-time fund launches.
| Jurisdiction | Annual Fees | Additional Cost Notes |
|---|---|---|
| Hong Kong | Around HKD3,000 | Fees are minimal |
| Cayman | Over USD10,000 | Requires registered office, annual audit, regulatory filings |
| BVI | Around USD6,000 | Lower filing requirements, but less global LP familiarity |
Key Considerations:
- Hong Kong LPFs offer competitive government fees but may involve higher legal and compliance costs depending on licensing needs.
- Cayman LPs incur higher fees but are offset by broad investor acceptance and tax neutrality.
- BVI LPs are cost-efficient for private structures but may require explanation for institutional onboarding.
Tax & Confidentiality Considerations
- Hong Kong LPFs enjoy zero capital gains tax and may qualify for the Unified Fund Exemption—but require SFC licensing or exemption.
- Cayman/BVI funds offer tax neutrality and greater privacy, with no public disclosure of beneficial ownership in most cases.
Audit & Administrator Coordination
- Hong Kong LPFs require local audit firms.
- Cayman/BVI funds benefit from a mature ecosystem of offshore administrators, custodians, and banks.
Sponsors should weigh the full cost stack—including legal, administrator, audit, and compliance fees—against investor expectations and fundraising goals.
Final Thought
There’s no one-size-fits-all answer. Jurisdictional choice should reflect your investor base, fund strategy, and operational priorities. At Shirley Choi & Co., we help sponsors navigate these decisions with clarity and confidence—onshore or offshore.