Articles of Association of Hong Kong Company
Over the past years, Hong Kong has become the hub for startups. More and more entrepreneurs want to start their businesses in Hong Kong. But, starting a business in Hong Kong is quite a process; there are essential documents that you need to have while incorporating one. The Articles of Association is a primary legal document that you must have alongside the incorporation form NNC1. The articles of association Hong Kong document states the guidelines and rules that the board has to follow while operating the business.
In this article, we will tell you what an article of association is, the mandatory clauses that need to be included, and the process of updating it.
Articles of Association in Hong Kong
Every company needs an Article of Association. It is a legal document that the Hong Kong government requires you to have while incorporating a HK business.
What is an article of association of a Hong Kong company?
The Articles of Association is a document that specifies the guidelines to be followed during the operation of the Hong Kong business. The objectives of the company are defined in the document. Generally, the procedures to conduct specific tasks, projects, appointing directors, and handling financial reports are written in the article of association.
It can be a complete user manual of the company that the chief executives can use to outline solutions and methods to accomplish daily operations. It can also define the objectives of the daily projects. Depending on the company in Hong Kong, the terms and content may vary slightly based on the jurisdiction. Usually, the Articles of Association should include the provisions on the business name, the share capital, its purpose, and the shareholder meetings.
What mandatory clauses need to be included in articles of association?
There are mandatory articles of Hong Kong clauses that are to be included in the articles of association Hong Kong. Here is a list of some of them:
- Name of the company (Sec 81).
- In an unlimited companys’ articles, it should state that the liability of the members is unlimited. (Sec 83(2)).
- In a limited companys‘ articles, it should be stated that the members’ liability is limited. (Sec 83(1)).
- In a business limited by shares, the articles of a Hong Kong company must state that the members’ liability is limited to the unpaid amount of shares that are held by its members, if any. (Sec 84(1)).
- If the business is wound up while a person is a member or is within one year after an individual ceases to be a member in a company limited by guarantee, the article must state that the member will give the business’s asset a required amount (not exceeding the specified amount). (Sec 84(2)).
- A business to be incorporated with a license granted under SEC 103 of the new company ordinance, or any business with the license is required to state the objectives while the license remains in force (Sec 82(1)). For other. businesses, it is not compulsory to state the objectives in the articles, but they may choose to do so (Sec 82(2)).
- A business with a share capital must state in the articles of association Hong Kong its initial shareholdings and capital. (Sec 85(1) & Sec 8 part 5 / Schedule 2).
Sample of Articles of Association For Private Limited By Shares
It is essential to mention the mandatory details in the articles of associations, but in a proper format that can be easily readable and understandable. Here is a sample of the articles of association Hong Kong for private limited by shares.
Updating Articles of Association in Hong Kong
Businesses often make the choice to change certain rules and procedures in the articles of association. The company may want to alter the required quorum for the board meetings or appoint new directors. This is due to the changes that they face over time. But in order for them to do so, they need to follow a process.
What is the process of updating the articles of association in Hong Kong?
It is very common for businesses to modify their articles of Hong Kong company to fit their investors’ preferences or fulfill the operation needs. It may be for situations such as when the business may want to change the process of calling a board meeting or setting powers and duties.
A business should fill the NAA1 form at the company registry in Hong Kong in order to alter the Articles. You should pay heed to Section 88 in the Companies Ordinance if you intend on updating the articles of Hong Kong company. An ordinary or special resolution is required based on the matter to be altered in the articles. The business owners must submit the proper notice with the resolution within 15 days to the Hong Kong company registry. It will be a breach of the law if the business fails to comply with the rules. Every individual responsible for not complying can be subject to a level 3 fine with an additional HK$300 penalty per day.
Along with altering the clauses, a Hong Kong business can also change its objectives in the articles of association. A business can restrict, abandon, or adopt new goals. To do so, you will have to heed the requirements that are listed in Section 89 of the Companies Ordinance. You will be required to fill the NAA2 form with a resolution and submit it to the Hong Kong registry. The owners of the company should also prepare a true certified copy of the altered articles of associations. A Hong Kong licensed solicitor, chartered secretary, or a practicing CPA can certify the updated articles.
Need Any Help Preparing Articles of Association for Your Hong Kong Company?
The article of incorporation is an integral part of incorporating a company in Hong Kong. Articles of associations are made by observing the important issues of the business management and rules & regulations set in the Companies Ordinance. It is common for businesses to alter their articles after a few years of operations to change a few matters and objectives. Hong Kong is known for giving businesses a good environment. They work on making the process of business incorporation easier for owners. Startupr is a platform that can assist you and make this process even smoother for you. We offer business incorporation services, provide a company secretary, accounting services, and also help to prepare articles of association for Hong Kong companies.