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Question

Which clause of memorandum defines the powers of the company?


Solution

Objects Clause:
It is the most important clause in the Memorandum of Association. It defines and limits the scope of operations of the company. It explains to the members the scope of activity of the company where their capital will be employed. It gives protection to the shareholders by ensuring that the funds raised for specified businesses are not going to be risked in another.
The outside public dealing with the company is informed of the extent of the powers of the company. A company can exercise only such powers as are either expressly stated therein or as May fairly be implied there from, including matters incidental or consequential to the powers so conferred.

Business Law

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