What Is a Company Constitution?

What Is a Company Constitution?

In Hong Kong, the company constitution is the primary governing document of a limited company. Under the Companies Ordinance (Cap. 622), which came into effect on 3 March 2014, the constitution of a private company consists entirely of its Articles of Association. Before Cap. 622, companies had two foundational documents: a Memorandum of Association (which defined the company’s external identity and objects) and Articles of Association (which governed internal management). The new Ordinance abolished the Memorandum entirely for companies incorporated on or after 3 March 2014. The Articles of Association now do both jobs. Think of the Articles as the internal rulebook of the company a legally binding contract between the company and each of its members (shareholders), and between the members themselves. It sets out the rules for:

📌 Key Insight

The Articles of Association have the effect of a contract under seal they are legally enforceable between the company and its members, and between members themselves. This makes drafting them carefully one of the most important steps in forming your company.

Legal Framework Under the Companies Ordinance (Cap. 622)

The Companies Ordinance (Cap. 622) is the primary statute governing the registration and operation of companies in Hong Kong. It replaced the old Companies Ordinance (Cap. 32) and brought Hong Kong’s company law in line with modern international standards particularly those of the United Kingdom’s Companies Act 2006. Here are the most important provisions as they relate to the company constitution:

Ordinance Section	What It Governs	Key Implication
Section 81	Effect of company’s constitution	The constitution binds the company and its members as a contract under seal
Section 82	Members’ rights under the constitution	Each member can enforce the Articles against the company and other members
Section 83	Inconsistency with the Ordinance	Provisions in the Articles that contradict Cap. 622 are void to that extent
Section 89	Altering the Articles	Articles can only be altered by special resolution (75% majority) unless otherwise restricted
Section 97–101	Company name in the constitution	The company’s registered name must appear in the Articles
Schedule 2	Model Articles	Default rules apply automatically if a company has no bespoke Articles

Importantly, the Ordinance operates as a default regime. Many of its provisions only apply “unless the articles otherwise provide.” This gives companies substantial flexibility to tailor their governance but that flexibility only benefits those who take the time to exercise it. Companies that simply adopt the Model Articles without customisation may find that the default rules don’t reflect their founders’ actual intentions particularly around share transfers, director powers, and dividend policy.

Model Articles vs. Custom Articles: Which Is Right for You?

When incorporating in Hong Kong, you have three broad options for your Articles of Association:

Option	What It Is	Best For	Risk
Model Articles (Schedule 2)	Default statutory Articles apply automatically if no Articles are filed	Simple sole-owner businesses with no investors	Higher Risk
Standard Custom Articles	Professionally drafted template adapted for your company type	Most private limited companies, startups, and SMEs	Low Risk
Bespoke Articles	Fully tailored Articles negotiated between founders, investors, and legal counsel	VC-backed startups, joint ventures, family offices, listed vehicles	Lowest Risk

Mandatory & Common Provisions

Hong Kong law does not require Articles to be exhaustive Cap. 622 fills many gaps by default. However, your Articles must include certain information, and in practice a complete, well-drafted set of Articles will address the following:

⚠️ Important: Private Company Restriction

The Articles of Association have the effect of a contract under seal they are legally enforceable between the company and its members, and between members themselves. This makes drafting them carefully one of the most important steps in forming your company.

Private vs. Public Companies: Constitutional Differences

The constitutional requirements and typical Articles differ significantly between private companies limited by shares (the most common type) and public companies. The table below summarises the key differences:

Feature	Private Company (Ltd)	Public Company (plc)
Share transfer restriction	Mandatory in Articles	Shares freely transferable
Maximum shareholders	50 (must be stated in Articles)	No limit
Public offer of shares	Prohibited	Permitted (subject to SFO)
AGM requirement	Can be dispensed with by unanimous agreement	Required annually
Written resolutions	Available for all resolutions	Not available for special resolutions removing directors or auditors
Pre-emption rights	Commonly included in Articles	Statutory pre-emption rights apply under Cap. 622
Financial disclosure	Less onerous summarised financial statements possible	Full statements required; subject to HKEX rules if listed

The overwhelming majority of businesses in Hong Kong including startups, SMEs, holding companies, and professional practices are private companies limited by shares. The remainder of this guide focuses on this structure, which is what GetStarted.hk helps you establish.

Adopting & Amending Your Articles

At Incorporation

Articles of Association must be submitted to the Companies Registry as part of the incorporation application (Form NNC1 for companies limited by shares). The process is:

Amending Existing Articles

After incorporation, Articles can only be amended by a special resolution a resolution passed by at least 75% of shareholders entitled to vote. The procedure is:

📌 Note on Entrenched Provisions

Under section 90 of Cap. 622, Articles can include “entrenchment provisions” clauses that can only be amended by a higher threshold than a special resolution, or by following a specific procedure. Entrenched provisions must be disclosed in the Articles and notified to the Companies Registry. They are a powerful tool for protecting minority shareholders or critical governance structures.

Key Clauses Founders & Investors Should Negotiate

For companies with multiple shareholders, the Articles are a negotiating document. Here are the clauses that matter most and what each side typically wants:

Clause	What It Does	Founder Preference	Investor Preference
Pre-emption on transfer	Existing shareholders get first right to buy shares before they’re sold to a third party	Broad prevent unwanted shareholders	Broad with carve-outs for fund/affiliate transfers
Drag-along rights	Majority can force minority to sell in an acquisition	Strongly preferred enables clean exit	Acceptable if trigger threshold is high (e.g., 75%+)
Tag-along rights	Minority can join a majority sale on the same terms	Less important to founders	Essential protects against being left out of exits
Reserved matters	Actions requiring shareholder or class consent	Narrow preserve operational flexibility	Broad more oversight and veto rights
Anti-dilution	Protection if new shares are issued at a lower price	Not applicable if holding ordinary shares	Weighted average or full ratchet mechanisms
Liquidation preference	Priority return of capital to investors on winding up or exit	Non-participating preference, low multiple	Participating preference, 1× or higher multiple
Board composition	Who can appoint and remove directors	Founder control of the board	Board seat or observer rights proportional to ownership
Good/Bad leaver provisions	Consequences for a shareholder-founder who leaves	Broad “good leaver” definition, minimal share forfeiture	Strict “bad leaver” triggers, shares bought at nominal value

💡 Pro Tip: Articles vs. Shareholders’ Agreement

Many of the provisions above are equally common in a separate Shareholders’ Agreement. Unlike the Articles (which are publicly filed at the Companies Registry), a Shareholders’ Agreement is a private contract. For sensitive commercial terms, a Shareholders’ Agreement is often the preferred vehicle. The two documents should be drafted together and cross-referenced to avoid conflicts.

Common Mistakes to Avoid

These are the most frequently encountered problems when reviewing the Articles of existing Hong Kong companies issues that typically only surface at the worst possible moment, such as during a funding round, a dispute, or an exit.

Frequently Asked Questions

Next Steps with GetStarted.hk

GetStarted.hk is a trusted Hong Kong company formation and corporate services provider. We help founders, entrepreneurs, and international businesses set up the right company structure from day one including properly drafted Articles of Association that reflect your specific situation.