Know the difference

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Know the difference

Wednesday, 15 April 2020 | Dr Sukhvinder Singh Dari

Know the difference

Many students get confused between business and corporate law. However, they are  the two sides of a coin, says Dr Sukhvinder Singh Dari

Many students, young professionals, and start-ups confuse business law and corporate law to be one and the same thing; whereas in reality, the two, at most, can be said to be two sides of the same coin. Organisations need advisors who understand the difference between both the laws, to help them make well-informed decisions.

Incomplete knowledge is one of the main reasons why so many people are unable to recognise the distinct nature of the two laws. While it is true that on surface, business and corporate may seem to mean the same thing, people, especially law students and young law professionals need to keep in mind that law is a very vast field, containing several branches. Only by studying the subject in depth, they can understand the complexity and identify the subtle differences.

Varied regulators for the business and corporate law

There is no denying the fact that both business and corporate law are meant to protect various organisations and companies in a number of settings. However, due to the different nature of the two laws, they are governed by different regulatory bodies.

The business law is governed by the central and State Government. But at the same time, the central and State Governments play very different roles in governing the business law. The central Government mainly looks after the laws concerning workplace security and stock purchases. And, the state government regulates any additional laws required to streamline the process.

The corporate law, on the other hand, is administered and regulated by the MCA, aka, the Ministry of Corporate Affairs through the Companies Act (2013). Herein, the Companies Act regulates a number of laws including, incorporation and responsibilities of the company, dissolution of the company, and directors and their roles in the company.

What exactly do business law and corporate law do?

Business law is usually more commonly used than corporate law. It provides a broad range of legal influence to any business. Any laws concerning contracts between directors, employees or clients, or related to employment, tax, or any other transaction are covered under the umbrella of business law.

Mergers, acquisitions, rules for company formation, and shareholder rights are also parts of the business law only. The business law, thus, takes care of the basic legalities required for a company's establishment.

Corporate law, on the other hand, sets and provides the basic guidelines to streamline the purchase, sales, and distribution of goods and/or items in the market. Corporate law also deals with bureaucratic procedures prevalent in the international selling markets. 

Many companies tend to overlook the corporate law and thus end up in a legal warfare. This is the sole reason why many multinational companies now hire an in-house corporate lawyer to help them avoid these minor yet significant corporate law breaches while dealing in the marketplace.

Both corporate and business laws have significant effects on companies, and play a crucial role in maintaining a successful business flow. With clear understanding, companies can hire the right attorney, and as far as students are concerned, they can separate each category and choose what step to take further on their career ladder.

The writer is Director, Symbiosis Law School, Nagpur

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