What Are a Hong Kong Company's Articles of Association? Is the Registry's Model Enough?

At a glance

The commonest misconception is that the articles are the shareholders’ agreement. They are two different things: the articles are a public document registered with the Registry, while the private arrangements between shareholders — how money is split, how someone exits — normally sit in a separate shareholders’ agreement.

What do the articles actually govern?

Put simply, the articles are the company’s own internal rulebook. How meetings are held, how much power the directors have, whether shares can be sold freely, what it takes for a resolution to pass — all of it lives here.

The law sets out required content in sections 81 to 85: the company name, the objects where applicable, details of members’ liability, and the initial share capital and shareholdings for a company with a share capital.

This is not an ornamental document. The day shareholders fall out, the day the directors want to refuse someone as a shareholder, or the day a decision has to be shown to have been properly made — the articles are the first thing anyone reaches for.

Where did the “memorandum” go?

If someone tells you that forming a company means filing “a memorandum and articles”, that is the old position.

The new Companies Ordinance (Cap. 622) abolished the memorandum of association. A company now needs only articles of association, and what used to be in the memorandum has been folded into them. So forming a company today means dealing with one document. Plenty of older material online still repeats “memorandum and articles” — which tells you it has not been updated.

Are the Registry’s model articles enough?

For most newly formed private companies — yes.

Under the Companies (Model Articles) Notice (Cap. 622H), the Registry provides ready-made models: private companies limited by shares use “Model B” in Schedule 2, and there is a simplified “Model A” also available to private companies (public companies use “Model C”, companies limited by guarantee “Model D”).

These models already include the provisions ordinary operation calls for — for example the protective provision allowing directors to refuse or suspend registration of a share transfer. For a small company with one shareholder, one director and a straightforward business, forming on the model and amending later if needed is the fastest route and the least error-prone.

When does it genuinely need tailoring?

Three situations are worth thinking through properly, ideally before the company is formed rather than after something has gone wrong:

• More than one shareholder. Where several people go in together, it is best to set out from the start what counts as passing and which decisions need everyone’s agreement. The model’s default rules may not match the actual balance between you.
• Restricting how shares change hands. This is the most commonly amended area in a multi-shareholder company. A private company’s articles can provide that directors may refuse or suspend registration of a transfer — the Registry’s model already carries provisions of this kind, but you may want them tighter, with pre-emption rights for instance. Without that layer, a partner can sell their shares to someone you have never met.
• Special voting arrangements. Putting in less money but keeping firm control of decisions, say, or a class of shares with no vote that simply takes dividends. These have to be written into the articles; a verbal understanding does not count.

To work out at the same time how the shares should be split and how much capital makes sense, see designing the share capital structure.

What is the procedure for changing the articles, and what gets filed?

Three steps, none of which can be skipped.

Step one: pass the resolution. Altering the articles requires a special resolution; an ordinary resolution is only available where the articles themselves expressly so provide. The threshold for a special resolution is higher, and the specific requirements are those in the Companies Ordinance.

Step two: assemble the documents. The resolution, a certified copy of the amended articles, and specified form NAA1, notice of alteration of articles.

Step three: file for registration. In simplifying the filing regime, the new Companies Ordinance changed most of the old “within 14 days” periods to “within 15 days”, and alterations to the articles follow the same period.

One more thing people get muddled: a share transfer does not itself require any specified form to be filed with the Registry immediately, but the company must report it in the first annual return (NAR1) prepared after the transfer. A change of shareholder is not reflected in Registry records straight away, but the annual filing catches it. For the NAR1 deadline and penalties, see the guide to the annual return.

You do not have to decide this alone

At formation the articles look like a formality — a model signed off and forgotten. It is on the day you split up, bring in a new shareholder or refuse a transfer that what that document said suddenly matters a great deal.

AIcountant is a licensed Hong Kong TCSP. When we form a company we will tell you, based on your shareholding structure, whether the model is enough and which provisions are worth changing; and if the articles need altering later, we handle the resolution and the NAA1 filing through to the end. Ready to start? Get started. Still weighing it up? Talk to us. To see the whole formation process first, read the complete guide to forming a Hong Kong company.

The provisions, model articles and filing requirements described here are as set out in the Companies Ordinance (Cap. 622), the Companies (Model Articles) Notice (Cap. 622H) and as most recently published by the Companies Registry. Drafting specific articles involves legal judgement; this is not professional advice, and you should consult a professional about your own situation.