In practice, corporate law involves the rules and regulations that apply to companies in terms of general corporate matters, such as the incorporation of companies, shareholders’ rights, articles of association, board meetings, a listing of companies and initial public offerings, and another day to day activities in course of normal business operations.
According to the best corporate law firms in India, corporate law is often confused with business law. However, they are different in terms of the areas of business they pertain to. Whereas corporate law is basically concerned with the larger issues, such as incorporation, buying decisions, shareholders’ rights, etc., business law is largely concerned with the employment, contractual obligations, taxes, etc.
In India, corporate law, also referred to as company law, regulates the business activities of corporations formed and registered under the Companies Act 1956. This act was modified and updated in 2013 and came to be known as Companies Act 2013. The Act has laid down the rules and regulations to be followed by a company, right from the time of incorporation until its entire life span. Rules and regulations are formulated and administered by the Ministry of Corporate Affairs. The Companies Act 2013 has been amended twice, last being the Companies 2nd Amendment Act 2017.
Corporation and Corporate Law
A corporation is a unique legal entity created under the law and is generally meant to conduct business. The law accords a corporation separate legal identity, different from those of the promoters or shareholders. The law deals with the corporate directly rather than with the stakeholder that make up a corporation. A corporate can sue and be sued.
When a company is incorporated, it gets individual legal identity and its business assets get separated from the personal assets of the owners or shareholders, whose liability now gets limited to the amount they have invested in the business, and they are not personally liable to the company’s debts. Most companies are incorporated as it offers several benefits to the business owners, such as it protects their personal assets, applicable tax rates are lower, gets easy access to capital markets and transfer of ownership becomes easy. A corporation continues to exist in the eyes of the law until it is formally dissolved or liquidated under the provisions of the law.
Corporate law covers all the legal aspects that a corporate might be faced with. Companies are subject to various rules and regulations that they have to comply with in order to avail of various benefits, such as tax breaks and other incentives. There are various complexities involved in the corporate law, and larger the corporation, wider is the scope of the law. The best corporate law firms in India are hired by companies to handle their legal obligations.
There are several aspects of a business, and there are different individual laws that deal with one particular aspect. Some of those laws are mentioned below.
- The Companies Act
- Foreign Trade Act
- The Partnership Act
- The Indian Contract act
- The Hire Purchase Act
These are only a few examples of laws that govern business activities of corporations; many other laws are there which address specific issues of conducting business in India.
Importance of Corporate Law
Corporations have a separate legal entity, different from the owners and shareholders. Therefore, in the same way, as people are subject to the laws of the land, laws have been enacted to govern the activities of companies. Corporate law is necessary to provide a fair and level playing field to all the players. In the absence of corporate laws, larger companies might subjugate the smaller ones.
Large corporations wield substantial financial strength, and as their power grows in a particular market, they may resort to unfair practices to enhance their hold further. This could potentially lead to smaller companies getting wiped out, creating a monopolistic situation where consumers are the biggest losers.
Corporate laws have been put in place to provide fair and equal opportunities to all, and that the new entrants are encouraged to do business and compete with the existing ones. Also, it provides protection to small businesses from the predating eyes of large companies. Mandatory compliance with the rules and regulations of the corporate law ensures that the rights of all business entities, as well as the consumers, are protected.
By penalizing any sort of violations of the corporate laws, the unpredictable and unfair activities of companies are kept under check, paving the way for a smooth and cordial business environment.
To assist companies in adhering to the provisions of the corporate law, we have lawyers and law firms who specialize in corporate law practice, to cater to their legal requirements. Business organizations need top legal firms in india to ensure that they operate within the ambit of the law, and also to bring to book others whom they might feel could be resorting to unfair and unlawful business practices to their advantage. Small and medium businesses prefer individual corporate lawyers whereas large corporations generally hire the best corporate law firms in India.
