What comes to mind when you hear the term “corporate law?” Understanding corporate law is important if you own a business.
Corporate law is a part of the law that deals with the formation and operation of a corporation. it makes up the rules, regulations, practices, and obligations that control the creation, operation, and even the dissolving of a corporation.
To break it down a little further, A corporation is a company or a group of people that come together for a business goal. The business is treated as a legal entity, separate from its owners, and can be held liable. This means that the law deals with the business directly and not the owners.
Some examples of corporate laws are
- Contracts
- Capital Market
- Mergers and Acquisitions
- Tax laws, and a lot more.
Let’s look at some examples of Corporate Laws in detail.
Corporate law principles
Table of Contents
The following characteristics are necessary for a business to qualify as a corporation:
Legal personality
Owners of the corporations put their entire resources in a separate legal entity where they can be used to conduct business activities.
Limited liability
Limited liability is when an owner of a corporation is liable for the asset they invest in a business. In the case of a lawsuit, they are not personally liable because their business is a separate legal entity.
Transferable shares
Shares can be transferred if an investor or owner decides to quit the corporation. their absence will not affect the running of the company
Delegated management
There is a hierarchy of operations in a corporation. board of directors runs the decision making and officers run the management operations. They split the decision-making process
Although they are not in charge of running the company directly, owners have a say in the decision-making of the company.
Investors ownership
Investors are involved in the decision-making of the company but are not involved directly in running it.
Examples of Corporate Laws
Contracts
Contracts are legally binding agreements between two or more persons. A corporate lawyer reviews, drafts, and negotiates agreements on behalf of corporations, which could involve lease agreements to acquisitions.
Capital Market
This is a financial market where people can buy or sell long-term equities and securities debts.
Corporate lawyers research company’s affairs and offer legal advice to merchants, and investors
Mergers and acquisitions
A merger is simply the combination of two businesses while an acquisition is the transfer of ownership rights of a business to another entity. This includes assets and liabilities. A merger and acquisition can cause a business to grow, downsize or change in nature. This is done with the help of a corporate lawyer.
Securities
This is the protection of assets. Advising clients on securities law compliance, preventing fraud, insider training, and market manipulation, as well as maintaining transparency within public traded companies.
Venture Capital
This includes financing startups or existing corporations privately or publicly as a means to help them build or expand.
Corporate governance
Corporate governance is the rules, policies, and procedures established by a business. The corporate governance of any business must align with legal regulations. Some examples are a board of directors meeting, an existing risk management system, and a clear division of labour.
Tax law
Tax law governs all types of taxes. E.g direct tax, indirect tax, value-added tax, income tax, property tax. Tax is the portion of the money that goes to the government in exchange for services. It also covers the application of existing tax laws on individuals and corporations.
Importance of corporate law
Corporate laws are in place to make the market a fair and level playing field for all businesses. It is a framework for the formation, ownership, operation, management, and even the dissolution of a corporation. it exists to make it easy for corporations to perform.
People involved in a corporation
Some of the key players involved in the running of a corporation are;
- Owners – They are also called shareholders. An owner is a person that has invested in a corporation. Typically, the bigger your shares, the more power, and control you have over decisions.
- Directors-The board of directors is in charge of the activities of the corporations. They develop long time plans and strategies for corporations. The board of directors is elected and appointed by the shareholders.
- Officers-officers in a corporation see the day-to-day running of the corporation. They serve as top-level management and take directions from the board of directors.
in some cases, they are also members of the board of directors
- Employees– employees carry out the daily activities in a corporation. they are usually at a non-executive level.
- Creditors and debtors– are people that carry out daily business deals with corporations.
READ >> > The Differences Between a Barrister and a Lawyer.
Corporate lawyers
A corporate lawyer is someone who practices corporate law. The corporate lawyer represents the business entity and not its owners. They offer services ranging from informing clients of their rights and obligations, they make sure all transactions are legal. They work towards making sure corporations maximize decisions that provide the best benefit under legal grounds.
A corporate lawyer needs to have extensive knowledge of corporate laws. This helps deal with corporate law issues. Some of these issues are false claims, corporate fraud, insider trading, bribery, antitrust violations, e.t.c.
Some of the ways these issues can be resolved are:
- Remedies in cases of breach
- Court orders to change corporate practices and policies
- Changes in the management structure of corporations
- Damage award for financial losses and other similar costs
A corporate lawyer should have good writing, communication and negotiation skills, and critical thinking skill because these skills are important in the corporate world.
