What is object clause? How does this affect the company’s operation and tax status?


The objects clause is set by the shareholders for directors to conduct the company’s businesses within provision of objects clause.

Technically to say, it will have no effect at all to the company’s operations and tax status if the businesses have been carried out in accordance with the objects clause. 

If the directors have entered into a business which is not stated within the object clause of the company, the directors may personally liable for the possible losses incurred. Any shareholders may take legal action towards the directors to demand them reimbursed back the damages & losses made.

If the directors and shareholders of the company are same group of people, then the object clause will carry less effect. You won’t sue yourselves for doing something else even though it is not stated in the M&A or objects clause.

More importantly, the company is empowered by the Companies Act 1965 to do almost everything in Malaysia.

(Image: nuttakit / FreeDigitalPhotos.net)