How Many Types of Corporate Law are There? – Let’s Find Out
When the word ‘corporate’ pops, the first image that hits the brain is a company with advanced infrastructure, several employees wearing formals, running day-to-day errands of the business world. A company has to undergo legal makeover in order to become a company recognized by law. There is a list of statutory compliances for companies in India without which, the corporate identity may be lost. In addition, there are various other different types of corporate law which govern the specific aspects related to corporations in India.
Sometimes, people get confused with the difference between business law and corporate law, assuming both to be one and the same. While corporate law is a much wider field of study, business law is a part of it. After incorporation, a company is not confined to conducting business only, but there are further interests like those of creditors, shareholders, contracting organisations, etc. which need to be protected. That is where the different types of corporate law hold prominence while studying the various aspects of corporations in India. Based on the specific field governed, the seven types of corporate law in India have been classified and explained below.
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Major Types of Corporate Law
A company is designated as a separate entity in the eyes of law. In order to make sure that this corporate veil does not lead to harm for anyone, there are several laws which ensure protection of the interests of all the parties associated with its function. Given below is the categorization of some of those major types of corporate laws in India:
A company is a legal entity, i.e. a person in the eyes of law which can sue and be sued in the court of law. But what gives a company such legal status? And how is a company recognized as one for its identity, functionaries, business, etc.? It is the Companies Act, 2013 which provides for the incorporation, business objectives, management, who represents a company and even the conclusion with the winding up process. For a company registered in Kolkata, corporate lawyers in Kolkata may be of great help for understanding the technicalities of a company’s functioning as per laws.
Since companies are engaged in some kind of goods or services while running a business objective, transactions are an everyday task. For business, employment, incorporation, etc. related arrangements, settlement of terms of such agreements is a must. The Indian Contract Act, 1872 governs rules related to contract making in India. It provides for the basic requirements for a valid contract to establish a legal relationship among natural and juristic persons. There is another one - Sale of Goods Act, 1930 which lays several principles related to customer and seller transactions. Companies hire corporations lawyer to help with contract management, negotiation, review, etc.
Incorporation of a company leads to limited liability of people in charge of such an entity. To keep things under control, some laws are there which regulate the market functioning related to capital markets in India. The major players in market regulation are the Ministry of Finance (Government of India), the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). The major laws dealing with market regulation in India include Securities and Exchange Board of India (SEBI) Act, 1992, Reserve Bank of India Act, 1934, Foreign Exchange Management Act, 1999 and the Foreign Exchange Management Act, 1999.
Legal disputes among legal entities is not something new. Since there are disputes on the basis of law, there has to be a resolution mechanism to be followed. Mostly, corporate disputes are subjected to resolution through arbitration as governed under the Arbitration and Conciliation Act,1996. However, other kinds of legal resolution are done by a special quasi-judicial body National Company Law Tribunal (NCLT) constituted under the Companies Act itself. Appeals against the orders of NCLT are dealt with by the National Company Law Appellate Tribunal (NCLAT). NCLT and NCLAT also deal with the cases of corporate insolvency under the Insolvency and Bankruptcy Code, 2016.
Before jumping towards governing laws, it is important to understand what securities are. It can be understood as the negotiable financial instruments having a certain financial value. Some of the examples of securities in India are Shares, scrips, stocks, bonds, debentures, debenture stocks etc. The major legislations dealing with regulating securities in India are - Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India (SEBI) Act, 1992, and the Depositories Act, 1996.
Monopoly in any field leads to unwarranted malpractices and wrongful gains which eventually makes one a market controller. To avoid monopoly, the Competition Act, 2002 was introduced after replacing Monopolies and Restrictive Trade Practices Act,1969. The objective of this law is to encourage competition in the market by restricting concentration of economic power in the hands of a few.
The Ministry of Labour and Employment (Government of India) is responsible for protection and safeguarding the interests of workers in India. Corporations may be the juristic identities when it comes to legal recognition. However, it is ultimately humans that conduct the business and every employee adds value to such business. Their welfare and protection from exploitation is governed through various laws. The Industrial Disputes Act, 1947, Contract Labour (Regulation And Abolition) Act,1970, Minimum Wages Act, 1948, Equal Remuneration Act, & Rules are some of the major legislations protecting rights of employees in India.