Introduction to Corporate Law

Corporate law encompasses within itself the sets of laws, rules, and regulations that govern the formulation, operation, and dissolution of business entities. There are several sets of laws and regulations that govern the business from its inception to dissolution while encompassing the journey of maintaining legal relationships with other individuals, businesses, and regulatory bodies in the corporate landscape.

This Article provides a brief overview to the reader on the key branches of corporate law which every business needs to comply to thrive in a corporate and legal landscape. 

Law on Contracts

Any business intending to undertake its business activities needs to enter into a binding agreement with other businesses/ individuals to perform mutual obligations, which need to be performed as prescribed in the agreement. These agreements further outline legal consequences if any party breaches to perform its legal obligations.

The businesses enter into various forms of contracts for varying purposes, including but not limited to entering into a lease contract to utilise any premises without exercising ownership over the premise, entering into employment contracts to govern the employer-employee relationships, entering into partnership agreements to enter into collaboration between business partners, further entering to loan agreements to secure finances from the banks, and public and private institutions to enable the growth of the business. 

Thus, contracts serve as a bedrock through which any business functions in a corporate landscape.

Company Law

This branch of corporate law governs entities that intend to undertake their business in any country and need to first incorporate a company in accordance with the laws and regulations of that country. The entity, once incorporated attains a legal credibility in the eyes of its customers. Further, the company, once incorporated, undertakes the business activities as laid down in it's chartered documents at the same time complying with all other legal compliances which are incidental for its growth and performance.

Law on Mergers & Acquisitions

When any business intends to enhance its market presence and operational capabilities to cater to more customers and explore new markets, it either merges with another company by creating a new legal entity or acquires/ purchases another company. 

When it merges with another entity, both companies pool their substantive resources be it financial and human capital into the final merged entity. 

Further, in acquisition the acquired company may either be absorbed into the acquirer's company or operate as a subsidiary. This acquisition enables the acquirer to enter new markets quickly without the time and expense of building a presence from scratch further enabling the acquirer to diversity their product line.

The legal aspects involved before such mergers and acquisitions concern the formulation of the acquisition agreement, the letter of intent or term sheet, the confidentiality agreement and the due diligence agreement, transition service agreements, and employment and non-compete agreements.

These agreements play a crucial role in structuring and executing the M& A transactions by providing clarity, protection and certainty to both buyer and sellers throughout the process.

Law on Intellectual Property Rights

This branch of corporate law concerns the aspects of protecting the intangible assets of the business which the company or the business has attained since its incorporation. 

Intellectual property refers to the creation of inventions, literary, artistic works, names and images used in commerce, these rights are intangible rights which the creator exercises over to benefit from its work or investment in creation. It is quintessential for every business to protect their IP rights in a competitive environment as owning IP provides businesses with a distinct competitive advantage over other businesses.

The laws governing IP are further categorised into the following areas of law:-

• Trademark- The law on trademarks helps any business to protect its trade name and logos, which reflect the unique identity of the business. 
• Patent- The law on patents protects the technological advancement of the company, which is novel and innovative. The law grants legal immunity to the creator of such invention and enables to exercise absolute ownership till the period of time which the law prescribes. 
• Copyrights- The law on copyrights protects the original works of authors more specifically it grants propriety rights to originators of every literary, artistic musical work to safeguard their original work against unauthorised use and provides legal ownership of creative works and empowers business to prevent unauthorised use of such intellectual property. 

There are several other IP rights, for instance trade secrets, integrated circuit layout designs, and plant variety protections which intend to protect businesses which are involved in such form of business activities.

Law on Venture Capital

The law on venture capital covers legal regulations aimed at regulating the flow of capital into startups. It governs the follow up investments, and even exit strategies or acquisitions.

This law would provide the mechanism of investment through the process of documentation of investment agreements shareholder agreements, subscription agreements, and negotiation of investment terms and documentation of investment agreements.

Law on Capital Markets 

This form of law governs platforms where the exchange of securities takes place where the investors transfer their capital to businesses for the businesses to finance various projects and investments.

Capital Markets include within itself the primary and the secondary market. In the former, the stocks or equities of the company are sold to the public/ investors for the first time, and whereas in the secondary market, these equities/ stocks are traded among the investors in general.

The law governing capital markets generally aims to regulate efficiency in the markets by regulating disclosures, trading practices, and the conduct of market participants for the smooth and effective functioning of the requisite market. 

The law concerning capital markets includes the law concerning the transactions in the securities market, more specifically laws on raising initial public offerings, follow on public offers, concerning the ambit of buy0backs, delisting, relisting, insider trading laws, disclosure under the listing agreements to maintain investors confidence in the market.

Law on Insolvency and Restructuring

When businesses become insolvent owing to the fact that they are unable to meet the financial obligations to their creditors, the business, once insolvent, restructures its organisational structure to repay the debts to the concerned creditors. During the restructuring, the businesses reorganise their managing structure, liquidate their assets, and transfer the ownership and management of businesses to another individual in order for them to sustain themselves within the corporate landscape.

Conclusion

The diverse branches of corporate law concern the aspect of laws and regulations that provides the comprehensive framework that enables every business, either startups/small-scale businesses or large-scale businesses which need to be mindful of while surviving in the corporate landscape. These laws are not comprehensive in nature, instead provide a brief outline of the dynamics of corporate law, which every corporation needs to comply with to ensure all legal and financial standards are met.

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