Define The Scope Of A Hong Kong Company With the AA Document

All local Hong Kong limited companies and/or non Hong Kong companies (that were incorporated outside HK) that are to conduct any business deals or activities locally in Hong Kong must be registered with the Companies Registry. Additionally to make things legal, the articles of association for each company must be created and submitted.

Articles of Association: The articles of association (or AA) is a legal document (of a HK company) that is seen as the contracts between the shareholders and the organization and among the shareholders of the organization. The document defines the manner in which how the shares are to be issued, how dividends are to be paid, how the financial records are to be audited, and what power is to be given to the shareholders regarding the voting rights. The Articles of Association is compulsory for setting up a company in Hong Kong. Refer to this Articles of Association sample when creating the document.

The document should possess rules and regulations that would govern the company’s internal affairs, and it is concerned with the internal management of a company. The articles of association defines the company’s purpose that covers the details regarding the board of directors, general meetings, voting rights, board proceedings, and more. In a typical articles of association, it would list the following provisions:

• The details regarding to shares: Share capital, forfeiture of share, call of share, conversion of share into stock, transfer of shares, share warrant, surrender of shares, and more.
• The information about the directors: Names of the directors, qualifications, appointment, remuneration, powers (within the company), and proceedings of the board of directors meetings.
• Voting rights: The voting rights of shareholders, and proceeding of shareholders general meetings.
• Dividends and reserves, accounts and audits, borrowing powers and winding up.

As a sample, let us use a private company limited by shares. The articles of association for private companies limited by shares should be prepared by assuming that the company is to adopt and simplify the administration as much as possible under the companies ordinance. In a private companies limited by shares, the company must have the share capital, and the articles of association must contain the provision to restrict the right to transfer shares. In the document, it may state that:

• The company has only one class of shares.
• The one class of shares should be fully paid.
• The directors do not appoint alternate directors.

Starting a business in HK is not only about running/managing the company, all owners are required to go through all the legal process to incorporate the companies, and do the profit tax filing.