Preparing and submitting the Articles of Association is a vital step when establishing a business in Hong Kong. This document, which contains essential company information, must be filed with the Companies Registry during the incorporation process under the Companies Ordinance.
So, what specific information should you include in your Articles of Association, and why is it important for starting your company? In today’s article, we will provide comprehensive answers to these crucial questions.
What is an Articles of Association?
The Articles of Association (AOA), often referred to as company articles, is a legal document in Hong Kong that outlines the internal rules, regulations, and governance structure of a company, particularly in relation to matters such as:
- Management structure: the roles and responsibilities of company directors, officers, and shareholders;
- Shareholder rights: the rights and obligations of shareholders, including voting rights, dividend entitlements, procedures for transferring shares; and
- Other administrative activities.
As part of the Hong Kong company registration process, the company’s articles of association must be drafted in either English or Chinese and then submitted to the Companies Registry for consideration.
Simply put, the Articles of Association serve as a company’s rulebook on how your company will conduct its affairs in compliance with internal policies and the law, particularly the legal framework of the Companies Ordinance.
What are included in the Articles of Association?
As stated, the Articles of Association (AOA) typically encompass all essential details of the company, internal regulations, and the management of its operations. Below are the mandatory contents of a Hong Kong AOA:
The articles must clearly state every official name of the company, regardless of whether the names are in English or Chinese.
For instance, if your company goes under two names, an English and a Chinese one, both must be included in the AOA.
These objectives are used to define the company’s business activities, geographical scope, and powers given to the business (if any). Since Hong Kong allows companies to operate in a wide range of activities, you will need to specify this information in the AOA.
The liability of members
The articles must specify the liability of members in accordance with the company type. In the case of limited companies, the AOA should make it clear as follows:
- For a company limited by shares: The AOA must state that the member’s liability is limited to any amount unpaid on their shares.
- For a company limited by guarantee: The AOA must state that each member commits to contributing a specified amount (not exceeding the company’s assets) should the company undergo liquidation during their membership or within a year after they cease to be a member. This contribution is intended to help cover the company’s expenses.
The same principle applies to unlimited companies registered under the Company Ordinance, meaning they shall state that the liability of its members is unlimited.
The share capital represents the maximum number of shares a company can issue.
This figure not only signifies the company’s financial capacity but also indicates the rights and privileges associated with different classes of shares. Moreover, it establishes the company’s ability to raise funds through the issuance of shares.
Please note that including this information is not needed for companies limited by guarantee, as they do not have a share capital or shareholders.
Initial holdings refer to the allocation of shares among founders or initial shareholders, detailing the number of shares each individual holds. This allocation is pivotal in defining the distribution of control and influence among the stakeholders.
Organization of general meetings
The AOA states the various types of general meetings that a company can conduct, which typically include Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs). AGMs are held annually, while EGMs are convened as needed to address specific issues.
The Articles establish the framework for conducting these meetings, covering aspects such as the notice period, agenda, quorum requirements, adjournment, chairperson, and voting rules among others.
Furthermore, the AOA may include provisions such as:
- Director and shareholder particulars
- The number of employees (for unlimited companies)
- The number of registered members (for companies limited by guarantee)
- Provisions on the transfer of share
- Requirements for shareholder meetings
- And so forth.
Therefore, it’s essential to carefully review the content of the articles to make sure they align with the law and your business needs.
How does a business file the AOA?
As you proceed with the incorporation of your Hong Kong company, filing the Articles of Association (AOA) is a critical step. But how exactly does this process work? Let’s look into the details below.
Step 1: Choose the suitable article types
You have the option to select from four different types of AOA offered by the Hong Kong government.
- Simplified AOA for a private company: “Sample A” is tailored for private companies limited by shares seeking streamlined administrative requirements.
- Model AOA for private companies limited by shares: “Sample B” is designed for private companies limited by shares with a more complex and detailed operation framework.
- Model AOA for a public company: “Sample C” is intended for public companies limited by shares.
- Model AOA for a company limited by guarantee: “Sample D” is suitable for limited companies without shareholders, instead owned by guarantee members.
For additional information and detailed samples of Hong Kong’s Articles of Association, please refer to the Companies Registry website.
Step 2: Draft your company articles
Once you have decided on article types, you can use the provided template to create your company’s Articles of Association effortlessly.
Simply follow the structure accurately and make sure all of the mandatory clauses are included such as company name, objects, members’ liability, share capital, and others.
Beyond these mandatory elements, you can selectively choose and adapt non-mandatory sections based on your company’s unique needs.
Step 3: Submit the AOA to the Companies Registry
You will need to submit the AOA to the Companies Registry, along with the company incorporation form and essential incorporation documents.
Upon approval of your application by the relevant authority, you can proceed to acquire the required licenses and initiate your business operations.
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How do you make amendments to the articles?
As the company’s requirements and legal obligations continually evolve, it becomes essential to adapt the Articles of Association to remain in alignment with the law.
To amend the Articles of Association, you will need to fill out the relevant form at the Hong Kong Company Registry:
- Form NAA1 to make changes to particular clauses in the AOA
- Form NAA2 to modify the objectives of the company
Furthermore, your company will need to submit the following documents to the Company Registry within 15 days after the alteration:
- A notice of the alteration in the specified form
- A copy of the new company’s articles, certified by a Hong Kong licensed solicitor, a practicing CPA, or a Chartered Secretary
- A resolution, special or ordinary, specified in Section 88 of the Company Ordinance (in case of changes in the company’s articles)
If these requirements are not met, a level 3 fine along with HK$300 might be imposed for each day during which the offense continues.
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Understanding the power of the Articles of Association is the key to your Hong Kong company’s establishment and success. For that reason, in this article, we have covered the essential aspects of the AOA, from the definition, contents, to the process of updating these documents.
If you need further information on the Articles of Association or have any inquiries about doing business in Hong Kong in general, please reach out to us at email@example.com. Our dedicated support team will get back to you in no time!
Frequently Asked Questions
Is a Memorandum of Association also required for Hong Kong company formation?
Under the previous Companies Ordinance, new companies were required to submit both the Articles of Association and Memorandum of Association during registration. However, some information was unnecessarily repeated in these documents.
In 2014, the government introduced a new Companies Ordinance (Cap.622). This revision eliminated the requirement for a Memorandum of Association, thereby shifting the primary focus solely to the Articles of Association.
What happens to the MOA of companies established before the New Ordinance?
For companies established prior to the enactment of the New Ordinance, you have the option to incorporate any provisions that were formerly part of the Memorandum into your company’s articles. These provisions are automatically considered to have been transferred to the Articles, whether or not they are restated.
Please be aware that if your Memorandum includes a condition specifying the initially registered share capital amount, it’s considered removed. Additionally, any condition that divides the share capital into fixed amounts is also abolished.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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