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What are a company's objects?

Companies registered from 1.10.2009 will generally not have a statement of objects. Before that, it was a requirement of registration to do so. Some companies registered after that date will have a statement of objects, e.g. a company limited by guarantee registered for charitable purposes will have to specify its objects (which must be charitable), as will a Community Interest Company. Another example is where a property management company is set up to manage a particular property (such as a block of flats).

At common law a company is limited to acting within the objects set out in its memorandum of association. Anything purported to be done by a company which is beyond those objects would be 'ultra vires' and void at common law, and the directors could be personally liable for such acts. From 1.10.2009, the common law rule is subject to CA 2006, sec31(1), which provides that, unless a company's articles specifically restrict the objects of a company, its objects are unrestricted.

Companies registered before that date will have had an objects clause in their original memorandum of association. Any provision in such a company's memorandum is now to be regarded as being in the articles (CA 2006, sec28), so the company's objects are still restricted. Most older companies (especially those registered up to 1989) would benefit from adopting new articles with no restriction on their objects. This would also have the benefit of updating the articles in other ways.

Companies incorporated before 1989 usually had very long objects clauses, setting out in detail all the possible types of business the company may want to engage in, followed by supplementary objects or powers covering all the standard activities of a company such as taking interests in land, borrowing money, lending money, employing people, etc. Such prolixity was an attempt to avoid the effects of the ultra vires rule.

Ordinary trading companies registered between 1989 and 1.10.2009 usually specified in the memorandum that the company is a 'general commercial company' which, by CA 1985, sec3A, could carry on any trade or business and had power to do all such things as are incidental or conducive thereto.

Company Law Solutions provides an expert service for reviewing and updating companies' articles.