Moa

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11 December 2012 Types of Objects in MOA ?

Ajay Mishra

Ajay Mishra (Expert)
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11 December 2012 Hi

Objects clause
As already stated above, the objects of the business and operations of an organisation form the core matter of the Memorandum of Association. It sets out the objects and is the most important of all clauses. It indicates the extent of company's power and the sphere of its activities. It defines the limit of operations to be carried on by the company.
However, all the objects as mentioned in the document are not meant to be pursued immediately after its incorporation. It thus become difficult to define objects being presently pursued by the company and those which the company had no intention of pursuing. It is required to state separately the main objects, which the company will basically undertake on incorporation and the incidental or ancillary objects for the attainment of the main objects. These objects are enumerated later in a concise manner.
This implies that any business carried on by the company should be stated in the Memorandum of Association hence the business activities not mentioned in the Objects Clause of the Memorandum shall be ultra vires and therefore, void. (Doctrine of Ultra Vires) The Memorandum should be stated in the following manner:
(a) the main objects of the company to be pursued by the company on its incorporation;
(b) objects incidental or ancillary to the attainment of the main objects.
(c) other objects not included in (a) or (b) above.

Ajay Mishra

Ajay Mishra (Expert)
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11 December 2012
Purpose of objects clause

The objects clause uniforms members of the use to which company's money can be put, and to third parties who deal with it, the extent of company's powers and activities. [Cotman v Brougham (1918-19) All ER 265 (HL)].

Method of stating objects
The statement of objects should be clear. It must not be too vague and too general, and too wide, for in that case it will defeat its very purpose and object. [Bhutoria Bros. (P) Ltd., In re (1958) 28 Comp Cas 122 (Cal)].

Objects incidental or ancillary to attainment of main objects
An act which is not expressly or impliedly authorised is prohibited, but this prohibition ought to be reasonably and not unreasonably understood and does not extend to things incidental to or consequential upon the main objects. [Attorney General v Great Eastern Railway Co. (1880) 5 AC 473 (HL)].
The acts incidental or naturally conducive to the main object are those, which have a reasonably proximate connection with the object. [Dr. A Lakshmanaswami Mudaliar v Life Insurance Corpn. of India (1963) 33 Comp Cas 420 (SC)].
The 'incidental or conducive' clause in objects clause refers to main object of company and not to any ancillary objects. [Evans v Brunner, Mond. & Co. Ltd. (1921) 1 Ch. 359 (Ch. D)].
Even, if an act is not within either main purpose as described in or special powers expressly given by statute, inquiry remains whether the act is incidental to or consequential upon main purpose and is a thing reasonably to be done for effecting it. [Attorney General v Mersey Railway Co. (1907) 1 Ch. 81 (HL)].
Where the primary object of the company was to carry on life insurance business in all its branches, the donations of the company's funds for the benefit of a trust for charitable purposes could not be said to be incidental to or naturally conducive to that object. [Dr. A. Lakshmanaswami Mudaliar v Life Insurance Corpn. of India (1963) 33 Comp Cas 420 (SC)].

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