The answer first
The articles of association are the company's constitution: the rules on how it is run, how decisions are made and how shares can be transferred. They are filed with the Companies Registry at incorporation and are public.
Many small companies use articles based on the Government's model articles, which work well for simple companies but may not suit companies with several shareholders, investors or family members. Articles are changed by special resolution, and the amended articles must be filed within 15 days.
At a glance
- Must state
- Company name, members' liability, and for companies with share capital, the capital and initial shareholdings
- Public?
- Yes, filed with the Companies Registry
- To amend
- Special resolution (75%)
- Filing
- Resolution and amended articles within 15 days
Model articles or bespoke?
| Situation | Typical approach |
|---|---|
| One shareholder, one director | Model-based articles are usually sufficient |
| Several founders | Add transfer restrictions, pre-emption and decision-making rules |
| Investors coming in | Bespoke articles and a shareholders' agreement, drafted by lawyers |
| Family company | Transfer restrictions to keep shares within the family; succession provisions |
| Subsidiary of a group | Articles aligned with group governance |
Clauses worth considering
- Share transfers: directors' discretion to refuse registration; rights of first refusal.
- Pre-emption on new shares: existing shareholders offered new shares first.
- Quorum and voting: how many directors or members must be present; casting votes.
- Appointment of directors: rights for major shareholders to appoint directors.
- Written resolutions and electronic meetings: flexibility for international boards.
- Share classes: rights attached to different classes.
Key takeawayThe articles are public; a shareholders' agreement is private. Commercially sensitive terms usually go in the shareholders' agreement, with the articles supporting it.
Amending the articles
| Step | Requirement |
|---|---|
| 1. Draft | Prepare the amendments or new articles |
| 2. Special resolution | At least 75% of votes cast at a meeting, or 75% of total voting rights in writing |
| 3. File | Copy of the special resolution and the amended articles within 15 days |
| 4. Record | Keep the updated articles with the company records |
Please noteSome provisions can be entrenched so that they need more than a special resolution to change. Entrenchment and class rights have specific rules; take legal advice.
Self-check: where do you stand?
| Question | If the answer is no |
|---|---|
| Do your articles reflect the current number and type of shareholders? | Review and update them |
| Are there restrictions on transferring shares to outsiders? | Consider adding them |
| Do the articles allow written resolutions and virtual meetings? | Update for international boards |
| Are amended articles filed with the Registry? | File within 15 days of the resolution |
| Is there a shareholders' agreement where there are several owners? | Consider one alongside the articles |
How DBMS Global can help
- Preparing articles at incorporation.
- Special resolutions and filings for amendments.
- Coordinating bespoke drafting with lawyers.
In summary
- The articles are the company's public rulebook.
- Tailor them when there is more than one owner.
- Amend by special resolution and file within 15 days.
Official references
- Companies Ordinance (Cap. 622), Part 3: articles of association
- Companies (Model Articles) Notice (Cap. 622H)