Corporate law is a set of rules, regulations, and laws that are relevant to corporations. These laws pertain to activities like formation, operation, management, and ownership of the corporation.
Corporate law must not be confused with business law. They cover different aspects of a corporation. While business law pertains to aspects like employment, taxes, and contracts, corporate law covers aspects like mergers, acquisitions, shareholder’s rights, etc.
Before we get into the nuances of corporate law, let’s first understand what a corporation is.
A corporation is an organization formed by a group of people that conducts business as a distinct legal entity. It comprises a large group of people like investors, owners, employees, etc. However, for legal purposes, a corporation is treated as a single entity. Simply put if a lawsuit is filed against a corporation, it is not filed against the individuals but the corporation as a whole. And, corporate laws refer to laws about the corporation and not the various entities it involves.
What is the Need for Corporate Laws?
Corporations are usually made to generate profits. As they grow, their power increases in a particular market. And, they may likely monopolize the market and try to gain control by becoming the sole providers of a particular product or service.
This can have a negative impact on the consumer as well as the market. This is because if a corporation has a monopoly it can dictate the price of the product/service and the consumer has no option but to pay. Also, this monopoly can restrict the growth of new businesses that offer similar products/services.
Corporate laws are made to ensure that the market remains fair and equal opportunity is available to new players to enter the market and compete. Also, these laws restrict the growth of monopolistic corporations to protect consumers from exploitation.
Common Areas where Corporate Law Features:
Mergers & Acquisition:
These are transactions where the ownership of a corporation is either transferred or combined with another. Mergers and acquisitions can change the nature of the corporation to a large extent. There are a set of corporate laws governing mergers and acquisitions that corporations involved are required to adhere to.
When a corporation is unable to pay off its debts due to the lack of funds or insufficient assets, it is said to have reached a state of corporate insolvency. A corporation has different options to deal with such a situation. A corporate lawyer can help the corporation choose the best option to cope with the situation.
Any act committed by a corporation that breaks corporate laws is considered a corporate crime. Some examples of corporate crimes are “false claims” wherein a corporate makes false claims to the government to get money; another instance is corporate fraud in which dishonest activities are performed so that the perpetrator benefits from it.
In case you find your organization entangled in a corporate case, you will need to engage a corporate lawyer who understands the nitty-gritty of corporate law.
Autrey Law Firm is one of the leading law firms in North Dakota that has a team of lawyers with expertise in corporate laws!