The Objects Clause

The Objects Clause is, in a very real sense, the heart of the Memorandum of Association. Required by Section 4(1)(c), it states the objects for which the company is proposed to be incorporated, along with any matter considered necessary in furtherance of those objects. Every other clause of the memorandum exists to identify, locate, or fund the company; the Objects Clause is the one that says what the company actually exists to do, and it is this clause that fixes the boundary the doctrine of ultra vires enforces, discussed earlier in this chapter.

The Objects Clause matters to three different audiences at once, and a good exam answer should be able to name all three. To the members (shareholders), it defines the field of enterprise their capital is being committed to — a person who invests in a company formed to manufacture textiles is entitled to expect that the company will not, without formally altering its memorandum, redirect that capital into an entirely unrelated venture such as real-estate speculation. To creditors and other outside parties dealing with the company, it defines the field within which the company can validly incur obligations, so that a lender, for instance, can assess whether a proposed borrowing genuinely falls within the company's stated business. To the Registrar of Companies and the wider regulatory system, it provides the basis on which incorporation itself is granted, since a company is registered specifically to carry on the objects it declares. …