Why is the object clause of the company is important for a business?

Why is the object clause of the company is important for a business?
The object clause determines the capacity of the Company. It indicates the extent of Company's powers and the sphere of the activities. It defines as well as confines the scope of the Company's powers and the Company cannot act beyond the powers defined in it.
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.


A.R. OPU (BD)