Although corporate law is named for corporations, this body of law regulates not only private and public corporations, but also businesses, partnerships, and sole traders. All of these business entities are structured differently, are financed differently, and are liable in different ways for debts the business accrues.
Corporate Law Regulates Business Organisations
Sole traders and partnerships, for instance, are owned and operated by people who finance and run the business, share the profits, and are liable for the debts. These businesses may or may not have other employees. In contrast, companies and corporations are considered to be their own separate legal entities, apart from the people who finance or run them. This means that the business itself is responsible for its debts, rather than managers, CEOs, or shareholders.
Corporate law regulates how these and other businesses are categorised. As well as this, corporate law determines how each type of business functions is founded, and how it is organised and run on a day-to-day and long-term business. Common tasks and processes such as hiring and firing employees, paying taxes, carrying out financial transactions, and others, can come under corporate law. However, because corporate law is such a huge body of law, it interacts and intersects with many other law fields, such as tax law, employment law, environmental law, and banking law.
Dispute Resolution in Corporate Law
Another major facet of corporate law is dispute resolution, in which two or more business entities have some kind of legal problem that needs to be solved.
In corporate law disputes, the preferred method of resolution is arbitration. This method is similar to court proceedings, in that the case is heard by an arbitrator who can make a legally binding decision. For businesses, the advantage of arbitration is that it’s a less expensive alternative to litigation that is also kept private, allowing for disputes to be solved without the risk of publicity that might damage business reputations and relationships. In most cases, litigation via the court system is adopted as a means of resolving a dispute only when arbitration is unsuccessful or impracticable.