Memorandum of Association Hong Kong: Key Updates Made Simple for New HK Company Owners

Key takeaways 

• The Memorandum and Articles of Association are two fundamental documents submitted to the government for company incorporation. 
• In a company limited by shares, the Memorandum of Association states the purposes for which the company is formed, and the Articles of Association is the “rulebook” for the internal management of the company
• Following the abolishment of the Memorandum of Association, the Hong Kong government has advised articles of association format updates for companies incorporated prior to the said policy change. 
• Sample articles of association are provided by the Hong Kong government. These articles, known as model articles, will be adopted by the company by default if it does not submit custom articles at the moment of incorporation. 

For entrepreneurs who have existing companies in multiple jurisdictions, “Memorandum of Association” (MoA) and “Articles of Association” (AoA) should not be unfamiliar terms. After all, these two documents form the foundation on which the company is built, and even now, they must be filed at the moment of incorporation in countries like the UK and India. When incorporating a company in Hong Kong, these entrepreneurs might therefore find it confusing that only some HK corporate service providers include an MoA in their offering.

What does it mean when your corporate service provider doesn’t offer an MoA? Does it mean that you’ll get no help in drafting and submitting this document? We’ll answer these questions below. 

What are the memorandum and articles of association? 

Though they sound similar, the MoA and the AoA are two distinct documents serving different purposes. 

MoA 

The MoA may be thought of as a statement of intention that cannot be altered in the company’s lifetime. It is prepared by the company’s founders with the help of legal professionals, and then signed by all the founders. 

 Below are some of the key details included in the MoA: 

• Company name 
• The company’s registered office address 
• A declaration of limited liability
  • E.g. “the liability of the members is limited”
• An objects clause that authorizes the company to carry out its proposed business activities. Any action beyond the scope of the objects clause will be considered void.
  • E.g. if a company is in the real estate industry, you might find the following clause “to purchase, take on lease, or otherwise acquire any real and personal property which the company may think necessary or convenient for the purpose of its business”. 
  • Other clauses you’ll find more generally include: “the power to receive money on deposit, to lend money and to guarantee the performance of contracts,” and “the power to act as employ agents” 
• A capital clause, stating the total share capital, the number of shares, and the value of each share.
  • E.g. “The capital of the company is HKD10000 divided into 1000 shares of HKD 1.00 each.” 
• The association clause, where the founding members declare their intention to be formed into a company and the number of shares they will subscribe to.

AoA 

The Articles of Association is a document that outlines the internal management of the company. This is a document that founders draft with the aid of legal professionals and corporate service providers, but many countries, like Hong Kong, also provide model articles. 

Unlike the MoA, alterations to the AoA are allowed under the Companies Ordinance, as long as those alterations do not contravene HK company law. 

If the MoA is a foundation, then the AoA may be thought of as a structure built on top of that foundation. The latter outlines rules and regulations for the company’s internal management, including how to appoint or remove directors, the procedures for convening meetings and votings, and who is allowed to vote on issues. 

Memorandum and Articles of Association of a Company: Are they both mandatory in HK? 

The short answer is, no. The New Companies Ordinance came into force in March 2014, effectively doing away with the Memorandum of association. There are 2 key reasons for this change: 

1. The abolishment of the ultra vires doctrine in relation to corporate capacity in 1997: “Ultra vires” is a latin phrase literally meaning “beyond the powers.” The ultra vires doctrine states that a company’s actions are invalid if they go beyond the powers granted to it by its MoA objects clause. Now that companies have all the rights of a natural person, the MoA is no longer relevant.
2. Redundancy: Most of the information found on the MoA, like the identities of founders, total share capital, and registered office address, can be found in the Articles of Association and the NNC1 incorporation form.

What this means is that, if you see a corporate service provider including the MoA in their offering, it’s time to start questioning if they are keeping up with HK company law. 

Article of association: Key updates on its format 

The following are now indispensable components in your HK limited company’s AoA 

• Your Company’s full name (Article 1) 
• Clauses stating that the members’ liability is limited (these are Article 2 and 3 in the Model Articles)  
• A table showing total share capital amount and members’ shareholding at the moment of incorporation

Sample Articles of Association 

As mentioned before, the Hong Kong government provides model articles that apply by default if the company does not submit its own custom articles. To see the changes listed above in action, you may visit Companies (Model Articles) Notice (Cap. 622H). You’ll find there a full sample of a Hong Kong limited company’s model articles. 

Do I have to change my AoA and MoA  if my company was incorporated before March 2014? 

If your Hong Kong company was incorporated prior to the implementation of the New Companies Ordinance, the Hong Kong government doesn’t require that you make changes to your constitutional documents, or to make additional filings. 

However, there are good reasons to update your MoA and AoA. In section 98, Cap. 622 of the New Companies Ordinance, the terms set out in the MoA will now be viewed, by default, as part of a company’s AoA. It’s also possible that your constitutional documents have made references to old company laws that have now been repealed.

If only for the sake of organization and clarity, it might be a good idea to update your AoA, and to assemble all constitutions into this one document.

How do you integrate memorandum and articles of association? 

• Step 1 – pass a special resolution (a resolution requiring 75% of votes to be passed) authorizing the changes to the AoA 
• Step 2 – obtain a certified copy of the altered AoA
• Step 3 – Fill in the relevant government forms. E.g. If you’ll incorporate provisions in the MoA into the AoA, the form you’ll fill in is the NAA3 form. 
• Step 4 – deliver and file all of the above at the Companies Registry

If you’d like to update your company’s constitutional documents, feel free to reach out to Get Started HK. We’ll take all the necessary steps to make sure that your AoA actually serves your business needs, so that you, too, may benefit from Hong Kong’s continued efforts to streamline corporate governance. Let us know how we can help!  

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