Objects clause, Business Law and Ethics

Objects Clause:

Reasons for Stating Objects

 Section 5 (1) (c) requires the memorandum of association to state the objects of the company. The section does not however indicate why a company's objects have to be stated in the company's memorandum of association. In Cotman v Brougham (21) Lord Parker stated that the statement of a company's objects in its memorandum of association is intended to serve the following purposes:

(a)     To protect subscribers who learn from it the purpose to which their money can be applied.

(b)     To protect persons who deal with the company and who can infer from it the extent of the company's powers.

These propositions will become clearer after a study of the doctrine of ultra vires.

Posted Date: 1/12/2013 2:29:39 AM | Location : United States

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