Companys objects, Business Law and Ethics

Companys objects:

A company's objects are stated pursuant to the provisions of an Act of Parliament. It must therefore be deduced, for example, that a company whose object has been stated to be "gold mining" cannot engage in "fried fish" business. This is because -

(a)     Prospective investors who read the objects clause realised that the company was formed to mine gold. If they bought the company's shares they did so because they intended their money to be used in pursuance of the gold mining business. They did not give the money for any other business and the company does not have their consent to use it on any other business. If the company tries to use the money on a different venture, such as frying fish and chips, they can go to court for an injunction to restrain it from doing so.

(b)     The statutory requirement that a company must state its objects in its memorandum would be rendered purposeless if, despite having stated the objects, the company was legally entitled to embark on any other activity. To prevent this happening, the courts concluded that the statement of objects would be taken to mean that what is not stated as an object cannot be pursued, or undertaken, by the company. In other words, the statutory requirement that the objects are to be stated implies that what has not been stated as an object cannot become a legitimate activity of the company.

Posted Date: 1/12/2013 2:30:49 AM | Location : United States

Related Discussions:- Companys objects, Assignment Help, Ask Question on Companys objects, Get Answer, Expert's Help, Companys objects Discussions

Write discussion on Companys objects
Your posts are moderated
Related Questions
Criminal Appeal - District Magistrate's Court Therefore in Section 10(1) of the Magistrate's Courts Act gives that any person that who is convicted of an offence on the trial

Scheme at meeting - reconstructions: Following approval of the scheme at meeting(s) application is made to the court for an order to approve and implement the scheme.  At this

Purchase of Shares - Voidable Contracts However an infant who applies to is allotted, a company's shares becomes a member to the company under S.28 (2) for the Companies Act f

State the term delegated legislation. Delegated legislation: Parliament sometimes provides the capability to legislate to other bodies as like regional parliaments and go

What is the justification behind the right of innocent passage through territorial waters, when the waters actually form a part of the states sovereign territory? The rational

Minimum subscription - Commencement of business: If the minimum subscription was not raised the company can only commence business or exercise borrowing powers if:- a)

QUESTION 1 Nowadays, many people are opting for Alternative Dispute Resolution (ADR) as a means to settle commercial disputes due to its advantages. Discuss QUESTION 2

Subject to it or affected it - African Customary Law Mostly one of the parties must be subject to it or affected through it. Whether as the plaintiff and the defendant rel

Completion of the Agreement However the hirer may give written notice about intention to complete the purchase through paying the owner on a specified day like the balance due

As you have already learned during your tenure at Midwest Valueland (MV) and from exposure to business news, it is not unusual for leaders and managers to encounter ethical situati