Mark Shipman, partner at Clifford Chance in Hong Kong, and Choo Wai Hong, a director of Clifford Chance Wong, the firm's Singapore office, outline the legal requirements for setting up a hedge fund
Generally, the two most common structures for a hedge fund are the limited liability company and the limited partnership, although the unit trust should not be ruled out entirely. The main factors in determining which of these vehicles is the most appropriate will be tax and, related to that, investor preference.
To enjoy many of the tax benefits associated with hedge funds, Japan-based hedge fund managers have to adopt a complex structure. Essentially, the fund management company will have to be located outside Japan and advised by a Japan-based investment team that does not make investment decisions. The dealing function is also normally based offshore.
An investment adviser in Japan, which provides investment advice to an offshore...