The object clause
(i) The Act states that the object clause of a company must be stated in the memorandum as mentioned in Section 18(1b).
(ii) An object clause defines the company’s capacity to carry out the permitted activities stated in the memorandum.
(iii) Object clause is of interest to an outsider as it can determine whether a company has acted ultra vires and rendering that act void ab initio (void even at the beginning)
(iv) The object clause will also give protection to the subscribers of the company who will learn and know the purposes to which their money can be applied.
(v) The object clause will also give protection to persons who deal with the company where they can infer the company’s capacity to enter into an activity.
(vi) The object clause must be lawful
Section 14(1) of the Act provides that the object clause must be lawful and as long as the objects are lawful, the Act is not concerned with the purpose of the company and shall not place restriction as to the purpose.
Figure 2.1 Constitution of a company
| Activity 2.1
|Question to activity 2.1||Suggested answers to activity 2.1|