(1) Primary and Secondary objectives : This is the most important clause of the memorandum. This clause explains the primary and secondary objectives of the company. On the basis we can decide the area of work of the company. The company cannot undertake any activity outside the purview of its object clause.
(2) Work outside the object clause : Any activity which is not mentioned in the object clause of the Memorandum cannot be carried out in the company even if all the shareholders agree to it. If any work is done, outside the preview of object clause is known as Uttra Vires and is considered void.
(3) Extended Area of Work : The objects which are not clear can lead to confusion and results has to be borne by the company. To avoid any confusion, complete clarity is tried to be created in Memorandum of Association. In order to avoid above situations generally company includes most area of function with the term “any other objects” in the object clause of its Memorandum of Association.
(4) Shareholders Approval : Any activity which is not mentioned in object clause of Memorandum of Association cannot be carried out even if all the shareholders agree or approve to that activity, but in exceptional cases when money has to be recovered or assets are to be safeguarded or to safeguard company’s interest, directors can do activities outside the object clause after passing the resolution.
(5) Liability : If any employee undertakes any artivity outside the object clause of Memorandum company is responsible for it.4f directors undertaken any work outside the purview of object clause they are responsible to the third parties.