Introduction
The law plays significant roles in the functioning of enterprises and society today (Bevans 2006). This is especially because the law of a given place determines the behavior of people in the given setup. Setup laws and regulations provide the people involved with the standard codes of conduct as well as the expectations. A desired law will as well supply the measures to implement the set of rules and regulation. It is common for conflicts to arise especially in a social set up where different persons interact, a good law should provide the means for settling these disputes. These features make law very important in success of any business. The success of any business depends on the following of protocol and law ensures observation of protocol (Romano 2001). This research paper discusses the functions and role of law in business and society.
Categories of law: Corporate law
Usually, categorization of law into sections is important so that each subsection of law deals with a defined function (Bevans 2006). Corporate law creates a favorable environment for businesses to thrive. It defines how the directors, creditors, shareholders, and employees interact with each other. Corporate law further becomes corporate finance and corporate governance. Corporate finance is concerned with the management of capital in a corporation.
It defines the ways of generating capital, ways of using and investing on capital. Hence, the corporate finance is concerned with selling the shares. It is also concerned with methods of liquidation in case the corporation needs to wind up. Corporate governance on the other hand defines the power relations between the board of directors and the shareholders, those with voting rights. It is also concerned with the consumers the stakeholders and the community at large. It aims at creating good public relations (Easterbrook 2000).
Corporate Law: Corporate finance and corporate governance
Corporate governance is responsible for deriving the constitution of a corporation. The constitution of a corporation is an important aspect since; it has to be in accordance with the National laws of a country (Easterbrook 2000). Therefore, the rules of a corporation are from a country’s statutes, for instance, in United States, corporate derive their constitutions from the DGCL (Delaware General Corporation Law).
The constitution normally, sets out the mandatory rules and the rules possible to derogate from. For instance, the rules not possible to derogate from include the methods of firing a member of the board of directors. The corporate finance defines the life and death of a corporation. It sets standards as to when the corporation is termed as insolvent, when the corporation commits corporate crime and also amalgamation and acquisitions (Romano 2001).
Corporate law brings order in the business environment. It allows businesses to operate in a fair environment by eliminating possibilities of unhealthy or unfair competition (Easterbrook 2000). Corporate finance ensures that capital management is fair to eliminate cases of misappropriation of funds. It also guides a corporation on the possible ventures available to venture into to generate capital. It also determines the investments possible to generate income for the long term.
Corporate governance derives the constitution of a corporation. Any corporation has to be in accordance with the laws of a country. Hence, the operations of any corporation have to remain within the scope of the legal requirements. Civil law takes care of this by fining any corporations that do not function within the scope of the country’s legal requirements or even order their closure. Implementation of the corporate law has created a favorable environment for businesses to thrive (Romano 2001).
References
Bevans, Neal. (2006). Business Organizations and Corporate Law. London: Cengage learning.
Easterbrook, Daniel. (2000). The Economic Structure of Corporate Law. California: California University.
Romano, Roberta. (2001). The genius of American corporate law. New York: American Enterprise Institute.