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How Does Corporate Law Work? Everything You Need To Know


Have you ever wondered what corporate law is? You may have heard about it on your favourite law-based TV show, or you’re considering a career in the legal field and want to learn more about the specificities. This article will give you a run-down on corporate law, its use, and how it protects the public and corporations. Without further ado, here’s everything you need to know about corporate law. 


What is corporate law?

Corporate law is a set of practices, rules and regulations governing corporations’ business. It’s important as it regulates the way companies interact with customers, and each other, ensuring that everything that happens is ‘above board’. The laws touch on things such as the rights and obligations of everyone involved with forming, operating and owning the corporation. It is in place to protect everybody involved from scams or business mishaps and assist in legally buying and selling shares in the company. 

Most often, a corporation will have its own dedicated team of corporate lawyers to regulate these things and keep everything functioning the way they need it to. Corporate law is not to be confused with a lawsuit, a legal action that an individual or company may take against a corporation to fight for compensation for wrongdoing. 


What is a corporation? 

A corporation is legally defined as an entity that exists to conduct business. Unlike small businesses, most large corporations exist as separate entities from the people who made them. This division between people and companies protects investors. When a person owns a part of a corporation, their liability becomes limited to their ownership, meaning they can’t lose more money than their initial investment if something goes wrong. As the corporation exists on its own, a business can be conducted under the corporation’s name rather than the name of specific people. 


What does a corporate lawyer do?

Corporate lawyers govern a range of important matters for a corporation. Some of these may include:

  • Corporate governance 
  • Corporate regulatory filings
  • Share transfers
  • Issuing shares 
  • Company incorporation
  • Shareholder agreements
  • Mergers 
  • Acquisitions 
  • Company dissolution
  • Corporate structuring
  • Corporate restructuring

These things directly affect the corporation and are mostly internal activities. Most big corporations will have a team of corporate lawyers who know their business well enough to handle these things as efficiently as possible. 


What is the difference between corporate and commercial law?

Commercial law and Corporate law are often used interchangeably. However, there are a few key differences that separate the two. The main difference is that corporate law tends to be more internal, whereas commercial law is more concerned with external sales actions. A commercial lawyer will be more likely to handle actions such as:

  • Commercial transactions
  • Legal rights relating to the sale of goods and services
  • B2B (business-to-business) and B2C (business-to-consumer) transactions 
  • Uniform Commercial Code (a law that governs the sale of goods)
  • Merchandising law
  • Trade laws

A large corporation will often need corporate and commercial lawyers on their team to handle internal and external governing. 


What is ‘Corporate Liability’ in criminal law?

Criminal law deals with offences that are ‘against the law’. Corporate liability is a corporation’s legal responsibility in any criminal actions or in some cases, a failure to act against criminal proceedings within the corporation. Corporate liability protects people against the corporation, for example, if the company was negligent or if poor management caused upset or unlawful dismissal. Some of the things it also includes are:

Fraud claims – if an employee has been accused of fraud, the corporation may be liable for charges. Claims can also be made against the corporation itself if it has been involved in fraudulent dealings.

Breaking contracts – while this also falls under contract law, breaking a clause within an employee’s contract can be a criminal offence. For example, if the contract states a rate of pay, but you don’t give the employee this, they could sue the corporation. This also applies to contacts made before forming the corporation, as the corporation must take legal liability for these. 

Overall, corporate liability within criminal law refers to holding the corporation liable for any illegal activity.


What is corporate finance law?

Corporate finance law is not a fixed type of law. This means to conduct it, you don’t necessarily have to be a ‘corporate finance lawyer’. In most cases, it will be handled by a corporate lawyer or a commercial lawyer depending on the job. It focuses on the economic side of running a corporation, working on incomings, outgoings and obtaining funds for the corporation. Effectively, it ensures that all actions involving money and the corporation are legal. 

It may fall under a range of different types of law, such as:

  • Corporate law 
  • Commercial law
  • Property law 
  • Contract law
  • Corporate insolvency law 

Many of these may intersect, or a few members of a corporation’s legal team may focus solely on finance.


Summing up

Hopefully, this blog has helped to give you some understanding of the ins and outs of corporate law. Like all types of law, corporate law is put in place to protect the corporation and the public from illegal activity and wrongdoing. It’s an important legal system that prevents harm and allows businesses to flourish.

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