Under Part 3, Division 2 (Sections 75–99) of the Hong Kong Companies Ordinance (Cap. 622) (Ref 1), the Articles of Association (A&A / 組織章程細則) is the sole statutory constitution of a Hong Kong company, acting as a legally binding contract under seal between the company and each member (Section 86). Whether you are incorporating a new entity or conducting KYB due diligence on a counterparty, three constitutional rules are paramount:
- 1. Abolition of the Memorandum of Association (Cap. 622 s.98): Since 3 March 2014, Hong Kong abolished the separate Memorandum of Association (章程大綱) and nominal Authorized Share Capital. For companies incorporated before 2014, all clauses formerly in their Memorandum are statutorily deemed to form part of their Articles of Association.
- 2. Cap. 622H Schedule 2 Model Articles & the Sole Director Quorum Rule: Most private companies adopt the statutory Model Articles (Cap. 622H Schedule 2) (Ref 2). Under Article 13(2), the default quorum for a board meeting is 2 directors; however, when a private company has only a Sole Director, Articles 8(2) and 18 automatically empower the sole director to take valid board decisions by signing a written record without holding a meeting.
- 3. Public A&A vs. Confidential Shareholders' Agreement (SHA): Because the Articles of Association are permanently open to public inspection on the Companies Registry (ICRIS) register, joint-venture partners and VC investors typically place sensitive commercial terms (valuation ratchets, Drag-Along/Tag-Along rights, founder vesting) in a private Shareholders' Agreement (SHA) while synchronizing core Pre-Emptive Rights and Right of First Refusal (ROFR) into customized Articles.
1. The 5 Mandatory Statutory Clauses in Every Hong Kong Articles of Association (Cap. 622 ss.81–85)
Under Sections 81 to 85 of the Companies Ordinance (Cap. 622), every company incorporated in Hong Kong must explicitly state five mandatory clauses in its Articles of Association (in addition to incorporating or modifying the Model Articles):
- Company Name Clause (Section 81): Must state the exact registered English name and/or Traditional Chinese name matching Form NNC1.
- Objects Clause — Optional except for Charities (Section 82 & s.115): Under Section 115(1), a Hong Kong commercial company has the full capacity, rights, powers, and privileges of a natural person of full age. Therefore, commercial companies are not required to state an Objects Clause (avoiding historical ultra vires invalidity), whereas Section 88 charities omitting "Limited" under s.103 must state exclusively charitable objects.
- Members' Limited Liability Clause (Section 83): Must state that the liability of its members is limited (either to any amount unpaid on the shares held by the member, or to the guarantee amount undertaken upon winding up).
- Initial Share Capital & Founder Shareholding Clause (Section 85(1)): Must state the initial capital and initial shareholdings subscribed by the founder members (e.g.,
10,000Ordinary Shares totalingHK$ 10,000). - Private Company Statutory Restrictions (Section 11(1)): To qualify as a Private Company Limited by Shares, the Articles must: (a) restrict a member's right to transfer shares; (b) limit the maximum number of members to 50 (excluding employee/former-employee shareholders); and (c) prohibit any invitation to the public to subscribe for any shares or debentures of the company.
2. Decoding Cap. 622H Model Articles: Schedule 1 vs. Schedule 2 vs. Schedule 3 & Sole Director Rules
The Companies (Model Articles) Notice (Cap. 622H) (Ref 2) prescribes three statutory templates. When you verify a company's constitutional documents on 86hc.com Official Filing Samples, you will encounter one of these three frameworks:
| Statutory Clause / Governance Rule | Schedule 2 Model Articles: Multi-Director Mode (2+ Directors) | Schedule 2 Model Articles: Sole Director Mode (1 Natural Person Director) | Bespoke / Customized Articles (Joint Ventures & VC Financing) |
|---|---|---|---|
| 1. Board Decision-Making & Quorum | Article 7 & 13(2): Decisions made by majority vote at a board meeting (default quorum = 2 directors) or unanimous written resolution (Article 8). | Articles 8(2), 13(2) & 18: Quorum rule disapplied; sole director exercises all board powers and simply keeps a signed written record of decisions within 7 days. | Custom quorum (e.g., must include 1 Investor Director) and Reserved Matters veto list. |
| 2. Share Transfer Approval | Article 64(1)–(2): Directors have absolute discretion to refuse to register any transfer of a share (satisfying Cap. 622 s.11(1)(a)), provided they return the transfer instrument within 2 months and state reasons upon request. | Strict Right of First Refusal (ROFR), Lock-up periods, Tag-Along & Drag-Along clauses. | |
| 3. Allotment of New Shares | Cap. 622 s.140 & Article 57: Directors cannot allot new shares without prior Ordinary Resolution approval of the shareholders in general meeting (except pro-rata rights issues). | Contractual Pre-Emptive Rights ensuring existing shareholders can subscribe pro-rata before third parties. | |
| 4. Company Chop / Common Seal | Cap. 622 s.124 & s.127 + Article 33: Keeping a metallic Common Seal (鋼印) is optional; a company may execute deeds by having 2 directors (or 1 director + Company Secretary, or Sole Director) sign directly. | Often specifies dual-signatory thresholds for banking and contracts exceeding a set HKD amount. | |
3. Public Articles of Association (A&A) vs. Private Shareholders' Agreement (SHA)
When two or more founders or corporate shareholders form a Hong Kong joint venture, relying solely on the unamended Schedule 2 Model Articles is dangerous. However, putting every commercial secret into the Articles is also unwise because the A&A is a public document downloadable by anyone via ICRIS Filing Retrieval. Institutional legal practice divides governance across two documents:
- What Must Be Written into the Public Articles of Association (A&A): Clauses that require in rem constitutional validity (so that any third-party share transfer or ultra-quorum board resolution in breach of the clause is automatically void ab initio):
- Classes of Shares & Preference Rights (Cap. 622 s.180): Preferred dividends, liquidation preference, and conversion ratios for Series A/B shares;
- Pre-Emptive Rights & Right of First Refusal (ROFR): Prohibiting the registration of any share transfer unless first offered pro-rata to existing members;
- Board Appointment & Quorum Rights: Entrenching each major shareholder's right to appoint a dedicated Director and requiring that director's presence for a valid board quorum.
- What Should Stay in a Confidential Shareholders' Agreement (SHA): Sensitive commercial arrangements that should not be exposed to competitors on the public registry:
- Valuation Formulas, Revenue Targets & Earn-Out Ratchets;
- Founder Lock-Up, Good Leaver / Bad Leaver Share Repurchase Pricing & Non-Compete Undertakings;
- Dividend Distribution Policy & Working Capital Funding Commitments;
- Deadlock Resolution & HKIAC Arbitration Clauses.
4. How to Amend a Hong Kong Company's Articles of Association After Incorporation (Form NAA1)
Under Section 88 of the Companies Ordinance (Cap. 622) (Ref 3), a Hong Kong company may alter or replace its Articles of Association at any time by following a strict 3-step statutory procedure:
- Step 1 — Pass a 75% Special Resolution of Members (s.88(2)): Convene a general meeting (or circulate a written resolution signed by 100% of voting members) to approve the exact text of the alterations or the adoption of an entirely new set of Articles by at least a 75% majority vote.
- Step 2 — File Form NAA1 Within 15 Days (s.88(5)): Within 15 days after the date on which the alteration takes effect, the company must deliver to the Registrar of Companies:
Form NAA1(Notice of Alteration of Articles);- A copy of the Special Resolution; and
- A certified printed copy of the Articles of Association as altered (consolidated version).
- Step 3 — Update Bank Mandates: Deliver a CPA/TCSP Certified True Copy (CTC) of the amended A&A and Form NAA1 to your corporate bankers (HSBC / OCBC). Note: Failure to file Form NAA1 within 15 days exposes the company and every responsible person to a Level 3 fine (
HK$ 10,000) plusHK$ 300per day (s.88(6)).
Frequently Asked Questions (FAQ)
No. Since the commencement of the new Companies Ordinance (Cap. 622) on 3 March 2014, the requirement for a Memorandum of Association was abolished. Every Hong Kong company now has only a single constitutional document: the Articles of Association (A&A / 組織章程細則). Under Section 98 of Cap. 622, for older companies incorporated before 3 March 2014, all provisions formerly contained in their Memorandum of Association are statutorily deemed to be provisions of their Articles of Association.
Yes. Schedule 2 of the Companies (Model Articles) Notice (Cap. 622H) specifically accommodates both multi-director and sole-director private companies. While Article 13(2) sets the default board quorum at 2 directors, Articles 8(2) and 18 expressly provide that when a private company has only one director, that sole director may take decisions without holding a board meeting and simply keep a signed written record of those decisions.
The statutory Schedule 2 Model Articles provide only basic baseline governance — they do not include contractual Pre-Emptive Rights on share transfers (Right of First Refusal), Drag-Along or Tag-Along rights, founder lock-up clauses, or Reserved Matters requiring investor veto approval. Furthermore, because the Articles of Association (A&A) are filed with the Companies Registry and open to public inspection, joint ventures usually put core share-transfer restrictions into a customized A&A while keeping confidential commercial terms in a private Shareholders' Agreement (SHA).
Under Section 88 of the Companies Ordinance (Cap. 622), a company may alter its Articles of Association by passing a Special Resolution (approved by at least 75% of the voting rights of members). Within 15 days after the alteration takes effect, the company must file Form NAA1 (Notice of Alteration of Articles) together with a certified copy of the amended Articles of Association with the Companies Registry.
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5. Official Statutory References & Citations
- Companies Ordinance (Cap. 622), Part 3 Division 2 (Sections 75–99) & Section 11: Statutory rules on Articles of Association, abolition of Memorandum of Association (s.98), mandatory clauses (ss.81–85), and Private Company restrictions (s.11).Hong Kong e-Legislation (Cap. 622).
- Companies (Model Articles) Notice (Cap. 622H), Schedules 1, 2 & 3: Full text of the statutory Model Articles for Public Companies, Private Companies Limited by Shares, and Companies Limited by Guarantee.Hong Kong e-Legislation (Cap. 622H).
- Companies Ordinance (Cap. 622), Section 88 & Form NAA1 Filing Guidelines: Statutory procedure and 15-day deadline for filing Notice of Alteration of Articles.Hong Kong Companies Registry.