Company law governs the creation, management, and actions of a company, with different laws to comply with based on the market of operations. It extends into legal formation, shareholder rights, and liability determination. The controversial corporate personality debate grants corporations certain legal rights equal to individual citizens.
Company law is an area of legal rules and statutes that guide the creation, management and actions of a company. This extremely complicated legal subject is often the focus of entire legal careers; companies often have entire legal departments intended to ensure cooperation with corporate law. Almost every stage of business activity, from setting up a company to interacting with the public, is handled through company law.
One of the problems that makes corporate law so complex is that companies may have to comply with many different sets of laws based on the market of operations. Regions and states may have laws, but so do most national governments. Additionally, those with international operations may find themselves subject to different sets of laws that govern a company’s production, wages, organization, distribution, and quality standards. As international law is far from complete, this can sometimes lead to direct conflicts of legality within a business operating in multiple parts of the world.
Corporate law goes back a long way in history, perhaps starting with the practice of granting royal charters to establish certain businesses. After several historical incidents in which the actions of an industrial segment nearly ruined a country’s economy, such as the 17th century Dutch Tulip Mania bubble, past monarchs and governments realized that the action of a enterprise or an independent industry can have a profound effect on the nation as a whole. The bigger the business or industry, the more vital it becomes to create a law for the safe management of companies in order to protect the nation’s economy to some extent.
Some of the areas that company law extends into include both the legal formation and winding-up procedures of a company, how litigation can be pursued against a company, shareholder rights, how power is distributed and how liability is determined legal. Companies are also subject to laws such as pollution regulations, fair wage and hour laws, anti-discrimination laws, and other more general statutes. Actions between companies, such as mergers and acquisitions, are also covered by many statutes.
One of the most controversial aspects of corporate law is the corporate personality debate, particularly in the United States. Originally, certain US Supreme Court decisions gave corporations a single legal status with respect to certain rights such as the payment of debts and the creation of contracts, suggesting that corporations were a separate legal entity that had rights equal to individual citizens in this sense. In 2010, the US Supreme Court handed down a highly controversial decision that also granted companies the right to fund political campaigns, in essentially the same way they do for individuals.
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