objects clause

The objects clause is contained in the memorandum of association and sets out the powers of the directors in running the company. Traditionally, each power of the company had to be enumerated, which resulted in detailed statements as to the powers of the company.

Companies are now able to use the phrase 'to carry on the business of a general commercial company' rather than use exhaustive lists of enumerated powers.

Activities undertaken by a company that are not contained in the objects clauses are ultra vires the company -- outside the company's powers. The directors are liable to the shareholders for the consequences of causing the company to undertake such activities. Such acts however do not relive the company of liability to third parties for those actions.

Usage: The objects clause was amended by the shareholders in a general meeting of the company.

Related Words: company; shareholders; directors; separate legal entity.