Abolition of Memorandum of Association in Hong Kong

On 3 March 2014, the Hong Kong Companies Ordinance (Cap. 622) came into force, introducing one of the most significant reforms to corporate governance and company formation in Hong Kong. Among the key changes was the abolition of the Memorandum of Association (MA), simplifying the constitutional framework of companies.

This reform matters because it streamlines incorporation, reduces duplication in company documents, and aligns Hong Kong with modern international company law practices. For both new and existing businesses, understanding this change is essential to ensure compliance and efficient corporate governance.

Understanding The Old vs New Requirements

Under the old Companies Ordinance (Cap. 32), a Hong Kong-incorporated company was required to maintain two constitutional documents:

• Memorandum of Association (MA) – set out the company’s objects, share capital, and fundamental conditions.
• Articles of Association (AA) – governed internal rules such as shareholder rights and director powers.

With the introduction of the new Companies Ordinance (Cap. 622), the Memorandum of Association was abolished. Companies are now only required to maintain Articles of Association, which consolidate the necessary incorporation information.

This change reduces duplication, making the Articles of Association the single, primary constitutional document of Hong Kong companies.

Why Was The Memorandum of Association Abolished?

The Memorandum of Association (MA) was once a key constitutional document for Hong Kong companies, but it became increasingly unnecessary over time. The new Companies Ordinance (Cap. 622), implemented in 2014, formally abolished the MA for several important reasons:

• Redundancy of the objects clause: The doctrine of ultra vires, which limited companies to act only within their stated objects, was abolished in 1997. Today, companies have the same legal capacity as a natural person, making restrictive objects clauses obsolete.
• Information overlap: Almost all the details previously contained in the MA, such as company name, liability of members, and share capital, are already captured in the Articles of Association and the incorporation form. This duplication made the MA unnecessary.
• Streamlining governance: By consolidating constitutional requirements into a single document — the Articles of Association — the new Ordinance simplified the incorporation process and ongoing corporate governance, reducing administrative burden for companies.

This reform aligns Hong Kong with international company law standards and reflects the city’s commitment to maintaining a modern and efficient business environment.

Impact On Existing Companies

The abolition of the Memorandum of Association applies not only to newly incorporated companies but also to those formed under the old Ordinance. To address this, the new Companies Ordinance provides transitional arrangements under section 98:

• Deemed provisions: Any condition in a company’s Memorandum of Association immediately before the commencement of the new Ordinance is now treated as part of that company’s Articles of Association.
• Automatic deletion of share capital references: Provisions in the MA stating the amount of authorised share capital or dividing share capital into fixed amounts are deemed deleted, in line with Hong Kong’s move to a no-par value regime.
• No mandatory action required: Existing companies are not legally obliged to amend their Articles of Association following the abolition of the MA. However, it is advisable to review and update these documents to ensure clarity, remove outdated references, and take advantage of modern corporate governance practices such as simplified capital reduction and relaxed financial assistance rules introduced under the new Companies Ordinance.

Should Companies Update Their Articles of Association?

While updating Articles of Association is not compulsory under the new Companies Ordinance (Cap. 622), it is highly recommended for clarity, compliance, and efficient governance.

After the abolition of the Memorandum of Association (MA), many existing companies still have outdated provisions carried over into their Articles. To ensure smooth operations, companies should take the opportunity to modernise their constitutional documents.

Key reasons to update your Articles of Association:

• Ensure compliance with the new Companies Ordinance: Confirm that your Articles reflect current legal requirements and remove outdated references to the abolished MA.
• Remove redundant provisions: Delete references to authorised share capital and fixed par value shares, which no longer apply under Hong Kong’s no-par regime.
• Leverage modern legal provisions: Updating Articles allows companies to benefit from reforms such as:
  • Capital reduction without court approval
  • More flexible financial assistance rules for share acquisitions
  • Streamlined procedures for corporate actions under the new CO

• Avoid confusion: Outdated constitutional references may cause misinterpretation or delay in corporate transactions.
• Strengthen corporate governance: Clear and updated Articles make it easier for directors, shareholders, and stakeholders to follow company rules consistently.

Benefits of updating Articles of Association:

• Clarity: Eliminates conflicting or outdated clauses.
• Compliance: Ensures alignment with the latest Companies Ordinance requirements.
• Efficiency: Simplifies decision-making and reduces administrative risks.
• Future-readiness: Prepares the company to take advantage of modern legal and corporate governance frameworks.

While companies are not legally obliged to update their Articles, doing so provides practical benefits and positions the business for smoother governance under Hong Kong’s modernised company law.

Procedures For Altering Articles of Association

Under the new Companies Ordinance (Cap. 622), companies may only alter their Articles of Association (AA) by passing a special resolution. This ensures that amendments to a company’s constitutional document are properly approved by shareholders and filed with the Companies Registry.

Step 1: Passing a Special Resolution

• A special resolution requires approval by at least 75% of members’ votes at a general meeting or by written resolution.
• The resolution must clearly state the proposed amendments to the Articles of Association.

Step 2: Filing with the Companies Registry

Once the resolution is passed, the company must deliver the following documents to the Companies Registry:

1. A copy of the special resolution (Section 622 of the new CO).
2. Relevant Notice of Alteration forms (NAA1–NAA4):
   1. Form NAA1 – Alteration of any provisions in the Articles (other than objects and certain articles of an existing company).
   2. Form NAA2 – Alteration of a company’s objects only.
   3. Form NAA3 – Alteration of certain articles of an existing company carried over from the old Memorandum of Association.
   4. Form NAA4 – Change of company status (e.g., from private to public, or vice versa) by altering the Articles.

3. A certified copy of the updated Articles of Association (required for NAA1, NAA2, and NAA3).
4. Any other documents required depending on the type of alteration.

Step 3: Practical Considerations for Companies

• Timing: The filings must be made within the statutory deadlines; otherwise, late penalties may apply.
• Consistency: Ensure all amendments are consistent with mandatory provisions of the new Companies Ordinance.
• Professional review: Companies should review whether their updated Articles also remove outdated references, align with the no-par value regime, and take advantage of modern corporate law reforms.
• Future-proofing: Well-drafted Articles help avoid unnecessary amendments in the future and support smoother corporate transactions.

By following these procedures, companies can ensure that their Articles of Association remain compliant, relevant, and aligned with Hong Kong’s modern corporate governance framework.

Mandatory Clauses in Articles of Association

With the abolition of the Memorandum of Association, the Articles of Association (AA) are now the sole constitutional document for Hong Kong companies under the Companies Ordinance (Cap. 622). To ensure legal compliance, the law requires that certain clauses must be included in the Articles.

Key Mandatory Clauses:

1. Company Name

Every company must clearly state its registered name in the Articles (section 81).

2. Members’ Liability

The Articles must specify whether the company is limited or unlimited:

• Limited company – must state that members’ liability is limited (section 83(1)).
• Unlimited company – must state that members’ liability is unlimited (section 83(2)).

3. Liability of Shareholders

For companies limited by shares: The Articles must state that liability of members is limited to any unpaid amount on the shares they hold (section 84(1)).

For companies limited by guarantee: The Articles must state that each member undertakes to contribute a specified amount to the company’s assets if it is wound up during or within one year of their membership (section 84(2)).

4. Share Capital and Initial Shareholdings (if applicable)

For companies with share capital, the Articles must set out details of the capital and initial shareholdings (section 85(1) and Schedule 2, Part 5, section 8).

Companies may also include the maximum number of shares they are authorised to issue (section 85(2)), though this is optional. This is optional under Cap. 622 (Section 85(2)), but many companies omit it since no-par regime applies.

5. Objects Clause (only if applicable)

Generally, Hong Kong companies are not required to state their objects in the Articles, as companies now have the full legal capacity of a natural person.

However, if a company is incorporated with a licence under section 103 (commonly for non-profit companies), the Articles must state its objects clause for as long as the licence remains in force (section 82(1)).

Key Takeaway for Businesses

Including these mandatory provisions ensures compliance with the Companies Ordinance and avoids delays or rejection during incorporation. For existing companies, the relevant clauses are deemed to be included in their Articles under section 98, but it is still advisable to review and update Articles to remove outdated references and ensure clarity.

Model Articles and Their Application

Under the new Companies Ordinance (Cap. 622), the Model Articles were introduced to replace the old Table A and Table C under the previous regime. These serve as a standard set of rules governing the internal management of companies and ensure a modernised, consistent framework for incorporation.

What Are Model Articles?

Model Articles are default constitutional provisions prescribed by the Companies (Model Articles) Notice (Cap. 622H). They provide companies with a ready-made governance framework, covering matters such as:

• Appointment and powers of directors
• Decision-making procedures
• Rights and obligations of members
• Administrative rules for company operation

They effectively streamline incorporation by removing the need for companies to draft extensive bespoke Articles of Association unless they want to customise specific provisions.

Types of Companies Covered

The Model Articles apply to three main categories of companies incorporated under the new Ordinance:

• Public companies limited by shares (Schedule 1)
• Private companies limited by shares (Schedule 2)
• Companies limited by guarantee (Schedule 3)

There are no Model Articles for unlimited companies, as these entities are rare and typically require highly tailored governance structures.

When Do Model Articles Apply?

• By default: If a newly incorporated company does not register bespoke Articles of Association, the appropriate Model Articles automatically apply (section 80 of the new CO).
• Partial adoption: Companies may adopt the Model Articles in full or incorporate selected provisions into their own Articles.
• Gap-filling role: If a company registers Articles that do not address certain matters, the relevant provisions of the Model Articles will apply by default to fill those gaps.

Flexibility for Customisation

The new regime provides companies with flexibility:

• Businesses can rely entirely on the Model Articles for simplicity.
• Alternatively, they can modify or exclude specific Model Articles to suit their governance needs, industry practices, or shareholder agreements.
• For growing businesses, customised Articles can help align governance structures with long-term strategies.

Key Takeaway for Businesses

The introduction of Model Articles simplifies incorporation while providing flexibility for companies to adapt their constitutional framework. For most small to medium-sized enterprises, adopting the Model Articles with minor adjustments offers a compliant and efficient solution. However, companies with more complex governance requirements should seek professional guidance to draft bespoke Articles.

Key Considerations for Businesses

The abolition of the Memorandum of Association and the consolidation of constitutional requirements into the Articles of Association bring both simplicity and responsibility for companies. To remain compliant and fully benefit from the new Companies Ordinance (Cap. 622), businesses should take the following considerations into account:

1. Review Articles Regularly

Companies should not treat Articles of Association as static documents. Regular reviews help ensure that governance rules remain clear, relevant, and aligned with current laws and best practices. Outdated or inconsistent provisions can create confusion in decision-making and corporate transactions.

2. Ensure Compliance with Mandatory Requirements

The Articles must contain all mandatory clauses, such as company name, members’ liability, and (where applicable) share capital and initial shareholdings. Companies with special licences (e.g., under section 103 for non-profits) must also include an objects clause while the licence is in force.

3. Avoid Outdated References to the Old Ordinance

Many existing companies’ Articles still reference provisions from the old Companies Ordinance (Cap. 32). While section 921(5) of the new CO provides deeming provisions for re-enacted laws, outdated references can still cause uncertainty or administrative delays. Proactively updating Articles ensures clarity and avoids confusion for directors, shareholders, and third parties.

4. Take Advantage of New Initiatives

The new Companies Ordinance introduces several reforms designed to give companies greater flexibility and efficiency, including:

• No-par value regime – removing the concept of par value for shares and simplifying share capital structures.
• Simplified capital reduction procedures – allowing non-court-based reduction of capital with proper shareholder approval and solvency statements.
• Relaxed rules on financial assistance – giving companies more flexibility to provide financial support in connection with share acquisitions.
• Streamlined governance mechanisms – modernising company law to align with international best practices.

Key Takeaway for Businesses

While existing companies are not legally required to amend their Articles after the abolition of the Memorandum, doing so provides clarity, ensures compliance, and enables businesses to take full advantage of the modern corporate law framework. Seeking professional advice helps companies balance compliance with flexibility while future-proofing their governance structure.

Conclusion

The abolition of the Memorandum of Association under the new Companies Ordinance (Cap. 622) reflects Hong Kong’s efforts to simplify and modernise its company law. Since companies are now deemed to have the legal capacity of a natural person, the Memorandum became redundant. Its essential information such as company name, liability of members, and share capital is now consolidated into the Articles of Association, making them the sole constitutional document of a company.

For both new and existing companies, having up-to-date Articles of Association is crucial for ensuring compliance, reducing ambiguity, and supporting effective governance. While companies incorporated under the old Ordinance are not legally required to amend their Articles, it is highly advisable to review and align them with the new CO. Doing so not only ensures clarity but also allows businesses to take advantage of modern corporate law reforms, such as the no-par value regime, simplified capital reductions, and relaxed financial assistance rules. The shift to a single constitutional document strengthens Hong Kong’s corporate framework and makes company management more efficient, but it also places responsibility on companies to keep their documents current.

How FastLane Group Can Help

At FastLane Group, we specialise in helping businesses stay compliant with Hong Kong’s evolving corporate landscape. Our experienced team provides:

• End-to-end company secretarial and incorporation services – from drafting and filing Articles of Association to ongoing compliance support.
• Review and update of Articles of Association – ensuring your company’s constitution reflects the latest legal requirements and best practices.
• Expert guidance on compliance with the new Companies Ordinance – helping you avoid outdated references, unclear clauses, and unnecessary risks.

Whether you are setting up a new business or managing an existing one, FastLane Group ensures your company documents are streamlined, compliant, and future-proof. Contact us today to review your Articles of Association and stay ahead in Hong Kong’s dynamic business environment.

FAQ

1. What is the Memorandum of Association, and why was it abolished in Hong Kong?

The Memorandum of Association was a constitutional document that contained a company’s objects clause and details such as authorised share capital. It was abolished under the new Companies Ordinance because all companies now have the legal capacity of a natural person, making the objects clause largely redundant. Essential company information is now included in the Articles of Association.

2. Do existing companies need to update their constitutional documents due to the abolition of the Memorandum?

No, existing companies are deemed to have incorporated the provisions of their old Memorandum into their Articles of Association. However, it is advisable to review and update Articles to remove outdated references and take advantage of new initiatives under the new Companies Ordinance.

3. What mandatory clauses must be included in the Articles of Association under the new Companies Ordinance?

New Articles must include:

• Company name.
• Liability of members (limited or unlimited).
• Details of share capital and initial shareholdings (for companies with share capital).

Undertakings of members for companies limited by guarantee.

Other clauses, such as company objects, are optional unless required by specific licenses.

4. What are Model Articles, and when do they apply?

Model Articles are standardised Articles prescribed under the Companies (Model Articles) Notice (Cap. 622H). They replace the old Table A and apply by default to new companies incorporated under the new CO, unless the company registers bespoke Articles that explicitly exclude or modify them. Model Articles exist for public and private companies limited by shares and companies limited by guarantee.

5. How can a company alter its Articles of Association under the new Companies Ordinance?

A company may only alter its Articles by special resolution. Required documents include the special resolution, the prescribed NAA form, and a certified copy of the altered Articles. (Forms NAA1, NAA2, NAA3, or NAA4, depending on the type of alteration). This ensures all changes are registered with the Companies Registry and legally valid.