What are Articles of Association in Hong Kong?

Many foreign entrepreneurs choose to invest in Hong Kong because it’s a great place for business. However, they must follow legal requirements, including having Articles of Association, which outline the company’s rules and structure. These articles help guide how the business operates within Hong Kong’s laws. Companies are classified under the Companies Ordinance, with the Hong Kong Companies Registry ensuring compliance. It’s important to properly process the Articles of Association when starting and running a new company in Hong Kong.

This article will give you a thorough idea of Hong Kong Articles of Association through the discussion of what they are, why they are needed and how they are modified under the Companies Ordinance.

What are Articles of Association & Why Are They Important?

The Articles of Association defines the management structure of the company. They outline the rights, duties and powers of the company’s shareholders and directors. These outlines are legally binding, and are filed towards the Company Registry during the process of company formation.

Full List of Contents in The Articles of Association:

• Company Name
  • Official name of the company – must include a legal suffix, such as ‘Inc.’ or ‘Ltd.’, to indicate its status as a legal entity.
• Company Type
  • Indication of whether the company is limited by shares, guarantee, or is an unlimited company.
• Share Capital
  • Structure of share capital, including authorized and issued shares.
• Rights Attached to Shares
  • Description of different classes of shares and their associated rights.
• Shareholder Rights
  • Voting rights, dividend entitlements, and rights to information.
• Director Appointment and Removal
  • Procedures for appointing and removing directors, including qualifications.
• Powers of Directors
  • Responsibilities and powers granted to the board of directors.
• Meetings
  • Rules for holding shareholder and director meetings, including notice periods and quorum requirements.
• Decision-Making Processes
  • Procedures for making decisions, including resolutions and voting processes.
• Share Issuance and Transfer
  • Guidelines for issuing new shares and transferring existing shares.
• Indemnification
  • Provisions for indemnifying directors and officers against liabilities.
• Dividend Distribution
  • Policies related to the declaration and payment of dividends.
• Dispute Resolution
  • Methods for resolving disputes among shareholders or between shareholders and directors.
• Winding-Up Procedures
  • Steps for winding up the company, including asset distribution.
• Amendments
  • Procedures for amending the Articles of Association.
• Accounts and Audits
  • Requirements for maintaining financial records and conducting audits.
• Notices
  • Rules governing the delivery of notices to shareholders and directors.
• Miscellaneous Provisions

They are vital in providing clarity on how the company will operate internally. Templates can be found here.

The New Company Ordinance:

Hong Kong government introduced a New Companies Ordinance to revamp and streamline the corporate legal framework, strengthening corporate governance and also reducing business hassles in the territory. Other than merging the Memorandum with the Articles of Association, other key reforms include:

• Introducing a no-par value regime for shares and enhancing corporate governance.
• Modernizes language
• Simplifies deregistration and winding-up processes
• Clarifies directors’ responsibilities.

These changes aim to improve business operations, raise governance standards, prevent misuse of companies, and create a more favorable environment, ultimately boosting investor confidence and modernizing Hong Kong’s company law framework.

What Are The Legal Requirements You Need To Know When Preparing For The Articles Of Association?

Here’s a breakdown of the legal requirements for Articles of Association (AoA) in Hong Kong, along with some important considerations:

• Mandatory Existence: Every company registered in Hong Kong must have a registered Articles of Association
• Must Specify: 
  • Company name
  • Company type (e.g., limited by shares)
  • Whether the liability of members is limited
• Optional Items: Can be mentioned other than the items above.
  • Decision-Making Processes
    Procedures for making decisions, including unanimous written resolutions.
  • Share Issuance and Transfer
    Guidelines for issuing new shares and transferring existing ones.
  • Indemnification
    Provisions for indemnifying directors and officers against liabilities.
  • Dispute Resolution
    Methods for resolving disputes among shareholders or between shareholders and directors.
• Must Abide The Law: Simple, all items in the Articles of Association must be legal.
• Consistency, Clarity and Specificity: The Articles of Association provisions should be internally consistent, clear, and to be able to minimize potential disputes.
• Alignment with Business Needs: Your Articles of Association should be carefully crafted to reflect your company’s unique structure, size, and operational needs.

Hong Kong provides articles examples (see image left). You can customize your own version based on the government’s version.

Which Companies Are Required To Have Articles of Association?

All companies need to file the Articles of Association. There are no exceptions.

Below are a few sample articles of association for various business types that are available from the Hong Kong Company Registry:

1. Simplified form of Article of Association 
2. Model articles for a private company 
   • For a public company 
   • For a company limited by guarantee 

Download FREE e-Book Launching a business in Hong Kong – A Guide for Entrepreneurs here

What is the process of Registering the Articles of Association?

To determine the level of complexity of the Articles of Association the structure of one Hong Kong company may differ from another Hong Kong company.

There are several steps that you will need to take to register the Articles of Association with the Hong Kong authorities. 

• Start by drafting the articles to ensure the crucial ones are included.
• For each additional requirement and provision, particular articles can be included for specific companies.
• Submit your Company’s Articles of Association as well as the incorporation form to the Companies Registry.

On the other hand, for this type of company with a limited number of shares, a model of articles is contained in the New Ordinance. 

Note: Starting from 2014 onwards, no company will have to undergo the MOA’s registration process. They just need to register for the Articles of Association.

Can The Articles of Association Be Amended?

As a company’s objectives change over time, amendments to the Articles of Association are possible. In Hong Kong, it is a quite simple and easy procedure with the Companies Registry of Hong Kong. In order to amend the articles of association, a company is obliged to fill in the NAA1 form at the Hong Kong Companies Registry.

Things You Need To Know To Change The Articles Of Association:

• Must be done in accordance with section 88 of the Companies Ordinance. According to the type of changes, whether it is a major or a minor one, a special resolution or and an ordinary resolution would be required.
• A written notice which includes the resolution mentioned must be submitted to the Hong Kong Company Registry no later than 15 days after the AGM.
• If the specified regulations are not met, then the offender is said to have infringed the law. The individual will have both a level 3 fine imposed and a daily penalty of HK$300.

In addition to amending special clauses in the articles of the association, you can also change the goals of your Hong Kong Limited Company. Two options are available. you can either give up the goals or cut them down or change them. In such instances, you must pay attention to the conditions as spelt out in section 89 of Companies Ordinance.

The NAA2 form is to be filled in and sent to the Hong Kong Company Registry with the resolution attached. Business owners should also make true copy of the Articles of the Association with the help of the certifying officer. This new version of the document will be signed by a solicitor of Hong Kong who holds a practicing certificate.

Steps To Change The Articles Of Association

• Reviewing the current document
• Identifying changes needed
• Gaining board approval
• Passing a resolution in a formal meeting with the necessary quorum and voting threshold

How FastLane Group Can Help?

Among many benefits of a cutting-edge, business-oriented space, Hong Kong’s government offers a range programs which are adjusted to the multifaceted needs of a bustling economy. The streamlined registration process becomes a strong reason for both entrepreneurs and foreign enterprises to take a part in the market. The Model Articles that are easily accessible online and provided by local authorities also standardize the procedure of the company setup because they offer them as templates for Articles of Association.

These conveniences though useful, obviously, will require the services of an expert to be critically reviewed to come up with the relevant models. This is preventive measure that reduces possibility of experiencing problems which might arise during the company incorporation process.

FastLane Group makes registration of the Hong Kong Articles of Association simple, guiding the client from beginning to Company Secretary service provided by the experts.  We take care of all procedural formalities making sure that your company meets all regulatory standards with ease. Contact us now.