ABSTRACT
Currently, every registered company must have a memorandum of association, which must be submitted to the Registrar of Companies prior to registration. The draft Companies Bill proposes to substitute one documentthe constitution-for the memorandum and articles. The Act specifies the minimum content of the memorandum in s 2. Section 2(1)(c) provides that the memorandum must state the ‘objects of the company’, a provision which has been present in company legislation since 1856. The model memoranda in the Tables, designed to provide a pattern for company promoters, show that the intention was that the objects should be few and should specify the business which the company intended to pursue but not the means by which the business was to be run. Thus, the Tables did (and do) not envisage a listing of such things as ‘this company can borrow money or enter into leases or purchase items necessary to facilitate the achievement of our specified object’. The legal effect of the objects clause was determined by the House of Lords in the famous case of Ashbury Carriage Co v Riche (1875), in which R sued the company for money owing to him in respect of his supervision of a project entered into by the company to build a railway in Belgium. The
company sought to deny liability for this debt by pointing out that the objects of the company were to build railway rolling stock and not railways, and asking the court to hold that the objects clause defined the contractual capacity of the company, thus denying the company the capacity to engage in contracts relating to building railways. The House of Lords accepted the company’s argument and held that since the company did not in law have the ability to enter into a contract to build a railway, it could have no capacity to employ R to supervise such a project-it was beyond the powers of the company, that is, it was ultra vires. Consequently, R had no contract and no contractual right to be paid.
