Articles of Association HK: Companies Ordinance Cap. 622

Everything that once sat in the memorandum, the company name, the limitation of members' liability, the initial capital, now belongs in the articles. Under section 86 of the Ordinance they bind the company and each member as if every one of them had signed and sealed the document, so a shareholder can sue on a pre-emption right or a class right without any separate contract. That statutory quality is what separates them from a shareholders agreement, which binds only its signatories, stays off the public register, and cannot override an inconsistent article.

Two further distinctions save time at the Registry. The certificate of incorporation proves the company exists; the articles say how it runs. The business registration certificate issued under the Business Registration Ordinance (Cap. 310) is a tax registration, even though the one-stop service delivers both certificates together. What makes a company private is written into the articles themselves: section 11 requires them to restrict a member's right to transfer shares, cap the membership at 50 excluding employees, and prohibit any invitation to the public to subscribe for shares or debentures. Drop one of those three clauses and you have quietly incorporated a public company. Our Hong Kong incorporation and company governance documents are drafted around that trio.

Hong Kong company law sits almost entirely in the Companies Ordinance (Cap. 622), in force since 3 March 2014, supplemented by the Companies (Model Articles) Notice (Cap. 622H). The articles go to the Registrar under section 67 with the incorporation form, must state the company name under section 81, and for a company with share capital must state the capital and initial shareholdings under section 85. If you register nothing of your own, Schedule 2 of Cap. 622H applies by force of sections 79 and 80, and any model article you have not excluded keeps applying alongside your text. Bespoke articles must therefore say expressly that the Schedule 2 model articles do not apply, or the company ends up with two overlapping rulebooks and a quorum nobody can identify.

Shares have carried no nominal value since the same date under section 135, so any clause inherited from a Cap. 32 precedent referring to authorised capital or par value is dead text. Directors cannot allot shares on their own initiative either: section 140 requires approval by resolution of the company. Amending the articles takes a special resolution of at least 75 per cent under section 88, after which a copy of the resolution reaches the Registrar within 15 days under section 622, with Form NAA1 and a certified copy of the amended text. The Companies Registry sets out the contents rules in its official guidance on the abolition of the memorandum of association. Two later reforms shape current drafting: the Companies (Amendment) Ordinance 2023 allows fully virtual and hybrid general meetings unless the articles expressly forbid virtual meeting technology or demand a physical venue, and every non-listed company must keep a Significant Controllers Register under sections 653C and following. Guarantee companies follow Schedule 3 instead, the route behind the charity and society constitutions in our non-profit collection.

The clearest trigger is a company with more than one shareholder. Model articles say almost nothing about who may buy a departing founder's stake, so a pre-emption regime has to be drafted in. Hong Kong grants no statutory right of first refusal on new issues or on transfers, and silence here means the board can dilute a minority at will. The second trigger is an incoming investor: preference shares, a liquidation waterfall and veto rights over borrowing all have to be expressed as class rights with their own variation procedure.

Family holding vehicles form a third group, usually because the founder wants shares to pass to named heirs without the board blocking registration on transmission. Joint ventures form a fourth, since two corporate shareholders holding equal stakes need a deadlock mechanism and a rule on casting votes, or the company freezes at its first disagreement. Two edge cases justify tailored drafting on their own. A private company with a sole member who is also the sole director may nominate a reserve director under section 455. A company planning to go public later will need the section 11 restrictions removed cleanly, so drafting them as a discrete block saves a redraft. Founders in either situation usually pair the articles with employment contracts under the Employment Ordinance for their own executive roles.

• The exclusion of the model articles appears in the interpretation clause, stating that Schedule 2 to Cap. 622H does not apply. This one sentence prevents the silent importation of default rules on quorum, dividends and directors' decisions that may contradict what you negotiated.
• The private company restrictions required by section 11 are set out as three separate provisions rather than one recital, so a later conversion to a public company means deleting identified articles. The 50 member cap carries the statutory exclusion for employees.
• The share capital and class rights clause creates ordinary shares and, where needed, preference or non-voting classes, each with its rights to dividends, to a return of capital and to vote. Because shares have no par value, it works from numbers of shares rather than a nominal amount.
• The transfer and pre-emption machinery gives existing members a right of first refusal at a determined price, sets the offer and acceptance periods, and preserves the directors' discretion to refuse registration. Permitted transfers to family members, trusts and group companies are carved out so ordinary estate planning does not trigger a pre-emption round.
• The meeting and resolution clauses fix the board quorum, notice periods, the chair's casting vote, the members' quorum and the use of virtual meeting technology. They track sections 548 to 561, so written resolutions circulated under the articles stay valid under the Ordinance.

Single member companies are the most common Hong Kong incorporation and the easiest to get wrong. The articles should set the members' quorum at one, confirm that the sole member's written decisions bind the company, and record the reserve director nomination. Under section 612(2)(a) such a company need not hold an annual general meeting at all, and the articles should not impose one by accident. The sole director of a private company cannot also serve as its company secretary, so the appointment clauses must keep the two offices apart.

Founder teams splitting equity two or three ways need drafting that anticipates a departure. Good leaver and bad leaver definitions, compulsory transfer on cessation of employment and a valuation referred to an independent accountant are the standard package. Equal splits also need a tie-break, because a board of two with no casting vote can do nothing once the founders disagree.

Family holding companies care most about continuity. Transmission clauses that oblige the directors to register a transfer to a named heir or to the executor of a deceased member avoid the classic dispute where surviving directors refuse registration and the estate is left with an unregistrable asset.

Joint ventures and group subsidiaries pull in opposite directions. A joint venture needs reserved matters written into the articles as well as the shareholders agreement, because only the articles bind a future transferee. A subsidiary needs speed: a quorum of one director, written board resolutions signed in counterparts, and a corporate representative appointed under section 606. Whatever the profile, the articles and any shareholders agreement must be reconciled clause by clause, because an article that conflicts with the agreement generally prevails as against the company.

You begin with the company name in English, Chinese or both, exactly as it will appear on the incorporation form, since a mismatch between the name clause and Form NNC1 is a standard rejection ground at the Registry. The template then asks how many share classes you need and, for each, the shares subscribed at incorporation, the amount paid and the rights attaching. From there you set the transfer regime, choosing whether pre-emption applies to every disposal or only to sales outside a permitted family or group circle. The board section takes the quorum, the notice for meetings, the chair's casting vote and alternates. The members' section takes the meeting quorum and confirms that virtual and hybrid meetings are permitted. Once completed in Word or PDF, the articles of association are signed by each founder member, delivered with Form NNC1 and the business registration notice, then kept at the registered office with the statutory registers. The rest of the founding paperwork sits in our complete catalogue of Hong Kong legal documents.

The most frequent error is recycling a pre 2014 precedent. Articles referring to the memorandum, to authorised capital, to par value or to Table A describe a regime that no longer exists, and the Registry accepts them because it does not review substance, leaving the company with void provisions. A close second is registering bespoke articles without excluding Schedule 2 of Cap. 622H, which lets the model articles fill every gap you thought you had closed. Third is the copy paste of a UK precedent: a written resolution in Hong Kong passes only when every eligible member has agreed to it under section 556, not on a 75 per cent majority as in England, and a clause drafted on the English model produces resolutions that were never validly passed.

The other pitfall is treating the articles of association as a document you sign once. Amendments require a special resolution, a certified copy of the amended text and Form NAA1 within 15 days, yet companies issue new classes or change their transfer rules without making that filing, so the public record stops matching reality. Directors also forget that a company using a serviced address still needs a valid occupation right at its registered office. If you lease your own premises, our Hong Kong tenancy agreements for commercial and residential property cover that side.