All You Need To Know About Business Laws

A look into the body of business laws that governs the business ecosystem 

What Is Business Law?

Business laws administer and regulate all business activities. Business laws have a command over all the undertaken activities and configure a decision of legal or illegal. Business law is also called commercial and mercantile law. Business laws vary from domain to domain.

Business laws are mandatory to clear all the malpractices and frauds functioning in the business and commerce world. The laws for business have several forms, ranging from sole traders to registered multinational corporations. 

On every level, national and international, business laws continue to evolve and develop new laws regarding consumer protection, competition, the internet, and computers. Let us dig deeper and understand the further classification of business law. 

Further Classification: Different Types of Business Laws 

There are mainly two types of business law that happens to pilot commercial matters in India. 

The main types of business law are:

• Regulation of commercial entities

Regulation of commercial entities deals with commodities such as private and government banks, corporate companies, private agencies, private institutions, and bankruptcy.

Regulation of commercial entities is the business laws that deal and engage with individuals, debtors, creditors, merchants, and trade of buy and sale in the commercial field.

Regulation of commercial entities makes sure all the sources of goods and services and trades exercised are legal. 

Different categories of regulation of commercial entities are contract laws, consumer protection laws, and intellectual property laws.

To know more about commercial and business laws, visit getlegal.com.

• Regulation of commercial transactions 

Regulation of commercial transactions imposes rules over the trade of money or another sort of value translation after a sale of goods and services.

Regulation of commercial transactions is the business law that only regulates transactions in the commercial or business field.

One of the famous examples that regulation of commercial transactions governs is money laundering, trading of stocks in the corporate world, etc.

Regulation of commercial transactions regulates based on the contacts assigned or agreed amongst the companies.

There are three types of transaction contracts.

• Fixed-price contracts
• Cost-plus contracts
• Time and material contracts

What Areas Of Business Require Business Laws?

If you are planning on establishing any business, you will have to understand the laws in the related area. Several laws depend on the type and kind of your business, and you will need them at every step while establishing your business.

• During the formation, business laws vary on the type of business organization you want to establish, like a sole proprietorship, partnership, LLC, etc. Understanding business laws will help you structure your business according to suitability.

• While Starting- Whenever you start a business, it is essential that you understand all sorts of legal requirements. You might have to take clearance from many departments or require some specific documents and licenses, etcetera. 

• While Planning- It is necessary that you understand all sorts of legalities while planning your business. Your lenders will require a draft of your business plan before they finance your business.

• While making Contracts- To complete everyday operations, companies require several business contracts that play an essential role. One must know their rights and circumstances, and in business contracts, the signatures of two or more parties who are making a contract must have their signatures.

• During Litigation- If you face any dispute, you can resolve business litigations when and if you are well-aware of all the required business laws. There are several kinds of possible conflicts in any organization-

• Employment disputes
• Complaints regarding discrimination
• Disputes revolving around any contract
• Breach of fiduciary duty
• Intellectual property infringement

Other Classification of Business Laws That Fall Under the Regulation of Commercial Entities and Regulation of Commercial Transactions

Other types of business laws are as follow:

• Business Finance Law

Business finance laws regulate the finances of a firm or company. Business finance law oversees the financial aspects such as companies working capital, cash flow, etc.

Corporate finance law consists of the legal finance rule that structures the financing of a business or a startup. 

Business finance law regulates the source of money circling in the company or a startup, which is how a company has raised funds to finance its operation. 

Finance and capital flow is a crucial aspect of young growing startups and companies. Corporate finance deals with such areas of the company. Cash flow is an overused term under business finance law. 

Hence, one has to channel their sources of funds properly. Without funds, the company or startup would not be able to function.

And to fill this void, companies or startups take illegal measures to provide or fund their respective companies with capital and cash flow. To know more about the business law of sale of goods or the sale and transfer of a business, visit getlegal.com.

• Company Formation Law

Company formation law overlooks the formation of companies and private startups. Company formulation laws regulate the registration and government aspects of the companies.

Company formation law commands the paperwork and legitimacy of a company. Company formation laws avoid the formation of dummy and fraud companies.

A company has to abide by some basic company formation laws to perform business in the markets.

One of the primary formation business laws is a public company must be formed with seven or more persons. Two or more persons must form a private company.

There was a further amendment under the 2013 Act (3(1)(c)) where one person company OPC could only form with one member in the company, also known as a sole proprietorship.

One must follow Company Formation Law for a strong foundation of the companies and startups.

• Securities Law

Securities law is also known as capital market law, financial markets law. Securities law is a group of law bodies that governs the issuance of the security.

This law covers security in investment in business such as stocks, equities, mutual funds, provident funds, debt funds, etc. 

One of the critical and popular law bodies regulating a security law is known as SEBI.

SEBI: SEBI stands for securities and exchange board of India. SEBI governs all the investment activities in the business or financial world. SEBI is a type of statutory corporation.

SEBI was founded on 12 April 1992. The main agenda of SEBI is to monitor and regulate the capital markets to protect the interest of retail investors by formulating specific regulations and guidelines.

Any company that wants to go public or wants to launch an IPO initially has to be confirmed by the SEBI. 

SEBI regulates the tasks entrusted to depositors, custodians of security, foreign portfolio investors, and other participants.

SEBI also overlooks and forms guidelines on capital market manipulation.

• Labour/Employment Law

Labour law or employment law deals with workers or employees working for corporates or private companies.

Labour/Employment law regulates under four labor laws in India:

• Code on wages 
• The code on social security
• The industrial and occupational code
• Safety health and working condition code

Labour, workers, or employees could reach out to labor/employment law if they witness misbehavior towards them. The labor/Employment law must take further actions to resolve the issue.

Labour/Employment law ensures that labor and employees are paid well according to their caliber and cared for in the workplace, especially with women.

If there is a sexual abuse or threat case against any worker, the labor/employment laws disregard the worker, and the worker is not working at the company.

Labour/employment also safeguards the interests of the health of the laborers and co-workers. This law abides partially more to the industries as laborers have to work on more chemicals and a disoriented workplace.

• Information Technology Law

Information technology law is also known as cyber law. This law concerns the law of information technology, including computing and the internet. 

Information technology is the body of law that provides a legal framework, collecting, storing, and disseminating electronic information in the global marketplace.

India enacted an information technology law or cyberlaw on 9 June 2000. The information technology law regulates all the informatics, digital information, software, and e-commerce. 

Intellectual property is an aspect of Information technology law. Information technology law has been restricted hard upon companies since almost every business has a digital and an online presence.

• Tax and Accounting Law

Tax and accounting law is one of the keys and essential bodies of all business laws. Tax and accounting law focuses on taxes rather than the appearance of the public financial statements. 

This law covers tax and accounting business law that deals with tax returns and tax payments. Tax and accounting law regulates the paperwork and makes sure the companies have been filing their taxes from quarter to quarter.

It is hard for a big business or corporate fund to dissect the tax returns, and there are some chances that such companies might leverage such a situation to taxation. 

Tax accounting is different for a company and different for an individual. Tax and accounting law focuses on the legality of a company or startup.

To conclude 

Business owners can embody all the business law bodies to safeguard the interests of retail buyers and investors.

All the business laws together govern that company is forming and performing business through a legal source of materials. 

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