If you are planning on having your own business, or you already have one, then it would be recommendable to get yourself familiar with the corporate law. Besides this term, it is also known as corporations law or company law.
Namely, this type of law usually deals with corporations forming and functioning. It is related to commercial and contract law. Furthermore, this law creates the rules, regulations and practices, and laws that have the control of operation and creation of any firm.
Before we provide you with more information, let’s define a corporation? What does it represent? Namely, it is a legal entity that is designed to conduct business. It can do it in its own name, just like any individual can. Now that we’ve got this covered, below, you’ll be provided with other important facts regarding corporate law.
Everything You Need To Know About Corporate Law
Federal Corporate Law
Some industries, such as telecommunications and transportation (among many others) are subject to licensing, federal laws, and regulations. For instance, your company is obligated to adhere to the federal Securities Act of 1933, which steers the sale of bonds and issues, stocks, and many other corporate securities.
If the federal laws change, it can be quite challenging for corporate directors because they need to find a way to keep up with the latest regulations. That’s why it’s crucial for all business owners to be familiar with current and proposed laws to make sure their firm is in legal and commercial compliance. These are the steps that must be taken:
- Making articles of association for your company that showcase its needs and industry top practices while respecting federal guidelines.
- Seeking any legal and technical assistance with acquisitions, mergers, reorganizations, and buyouts.
- Hiring a person who is going to be a business secretary. This individual is going to deal with corporate law compliance and let the board of directors knows if they should implement any important changes.
- Restore procedures through which obligatory filing is made as needed by the secretary.
What Are The Principles Of This Law?
Corporate law contains five principles. The first one is a legal personality, where business owners place their resources into another entity. This entity can then use their assets and sell them if they want to.
In this case, creditors are not able to easily take the assets back, however, they can develop a separate organization that acts on its own. With limited liability, you can sue the company, however, only the assets of this firm are at risk.
The prosecutor may not demand any individual assets from the business owners. Furthermore, the limited liability allows the owners to extend their investments and take risks. Now, if the business owner decides he or she doesn’t want any part of the company, it doesn’t necessarily mean that the company must be closed.
A special part of the business is that the owners are allowed to transfer shares without experiencing any difficulties and issues that are frequently related to ownership transfer. Moreover, there may be some boundaries concerning how ownership is transposed among shareholders, however, the ownership can still get transferred to allow the firm to proceed when business owners want to make changes.
Entrusted management is another principle of this law. There’s a properly defined structure in companies concerning how they deal with their affairs. Board directors and officers have the same responsibilities when it comes to making important decisions.
Board members hire and supervise officers and also confirm any huge decisions that were being made. Shareholders are the ones who elect the board, while officers deal with the daily operations of the business.
If this amount of information is a bit confusing and complicated to you, there are some things you can do. Namely, on this website, you can find many answers regarding corporate law that may not have been answered in this section. It’s important to get all the facts straight if you’re planning to establish a company.
What Else Do You Need To Know?
Categories Of Corporate Law
The most common areas within this law involve:
- Business formation laws, which determine the steps to establish a company, LLC, or partnership.
- Customer protection laws that prevent any form of deceit and the sale of harmful and misleading products or services
- Contract laws that rule legal contracts with other corporations, suppliers, and clients as well.
- Hiring and employment laws that protect future and existing employees and making sure no one is ever discriminated against based on their race, religion, sex, and at the same time they regulate worker health and safety.
- Environmental laws
- IP laws that secure the original creative inventions and works of the company
- Zoning laws that determine the use of firm property
Who Are Individuals Involved In A Corporation?
There are many parties involved in a corporation. Now, it doesn’t mean that everybody who works in a corporation or interacts with it is an owner. This is the list of people who are involved in the operation of a certain company:
- Owners – This is a person who has invested a substantial amount of money in a corporation. Normally, the bigger share of the corporation that you own, the more control you have over many essential decisions. Besides being called owners, these people are also known as shareholders.
- Director – This is the person who supervises the activities of the corporation. Normally, he or she gives his/her vote when it’s important to make some key decisions. This individual is typically elected by the business owner, however, it doesn’t mean that this person is forced to follow famous opinions during voting.
- Officers – These people are usually present when some of the most important decisions are being made. They receive direction from the board of directors when they are making crucial decisions.
- Employees- They carry out certain functions of a company for a certain amount of money.
- Debtors and creditors – When people and other firms do business with a particular corporation, they represent the corporation’s debtors and creators.
It is easy to conclude that corporate law, just like any other, is far from easy. On the contrary. It is very complex, especially, if you’re not a corporate lawyer, however, we hope that this article has managed to make things a bit clearer.