Basic Concepts of the Corporate Law

Corporate Law, also known as Company Law, is mainly defined as the study on how businesses or corporations, shareholders, employees, directors, creditors, consumers, environment and the community interact with each other. Laws are governed in different countries may generally vary, and the same thing goes with the company law.

It is the reflection of the rules and conditions that each and every establishment has to take into consideration, depending on the country which they are living in. what if two companies from two different companies are about to do business? Which law will be followed and what law structure these two businesses have to refer to? The answer is simple – wherever the deal will be made, the corporations law of that particular country will be followed.

Each company is made up of directors, employees and even some other significant individuals such as the shareholders who make it even more possible for the company’s profits and revenues to continuously grow. Because there are numerous people and groups of individuals involved, there are particular rules that should be followed, along with the fact that certain consequences will follow if one of these rules, terms and / or conditions were not met.

There are different types of conflicting situations that may occur within a company – and one of these problems includes the fact that the company has to decide who takes over a certain responsibility, who manages the shares, who is responsible for handling the people and so on. Simply said, power and authority are two of the biggest issues that a lot of people are fighting over. Without the corporate law, it may be quite impossible to define who should have more authority over the other, and which party or individual has the right to take control over things.

This is why company law is very important in any form of business – although these laws governed may still vary depending on the country. This is because different countries have various beliefs and cultures, and these differences may generally affect the type of law that each and every single place has to follow.

The shares and the stocks that are being invested in the company is also another factor that establishments have to take into consideration. The corporate law makes it easier for people involved in the business to determine who takes larger shares, and the total percentage of stockholders, under certain circumstances. When it comes to financial issues or matters, it may be difficult to make the right decision especially if you do not have a law to follow. But on the other hand, if there is a fixed law, there are no questions asked and people have no choice but to follow whatever is written on the law.

Regardless if you are planning on setting up a new business or whether you’re within the process of mergers or acquisition of businesses, it is best that you seek help from a corporate lawyer or someone who has had professional experience in this field. Corporate law may seem delicate at first, but with proper knowledge and with the right preparations, businesses may benefit from it – and can even serve as a form of protection at the same time.


23 September 2012