Corporate Law Is Beneficial And Affects Society

The functions and role of law in business and society are vast and must be narrowed down for better understanding. Law is important to businesses because it not only protects the business but it gives the business guidelines to follow to ensure fair dealing and also reliability of business transactions. It important that a business understand that there are rules that must be followed when conducting day-to-day transactions and they will be held accountable for their actions. Law regulates society by also holding individuals accountable for their actions. The law essentially defines the rules and also defines what happens if the rules are broken by an individual or business.

Corporations have their pros and cons. The pros of a corporation include the liability of the corporation instead of individuals, corporate taxes rather than personal taxes, the everlasting nature of a corporation, and the capital corporations make on the stock market. The cons of a corporation include the costs of incorporating, dealing with shareholders, and double taxation.

Firms have responsibilities to society at large by not harming the environment (polluting the air or water); producing safe products and providing a safe work environment for it’s employees and the surrounding residents.

Throughout history, major corporations have taken control over nations. During the late 1800s and early 1900s big business have made a name for themselves in the united states. Even though, major corporations have had a positive impact on society, they in fact hurt our economy greatly.

In the case of Anthony, a New Jersey resident and owner of a waste disposal company in the state of New Jersey, and his two business associates, Paul and Silvio, whom suffered severe injuries due to a motor vehicle accident caused by a negligent truck driver; they have great standing to sue against the neglectful driver and the company associated with the ownership of the vehicle. Regardless of the diversity of their residency/ citizenship, the affected party can proceed to sue the corporation responsible for the damages caused by their staff and property; reason being that they are protected under the Constitution’s diversity of citizenship, and the privileges and immunities clause. Furthermore, these two constitutional clauses in addition to the commerce clause, dictate the court that the matter needs to be brought to.

The author of the article, Over-regulated America, displays the burden over-regulation can have on a country’s free-market economy. For example, one of the downfalls of over regulation is these new rules, or laws, are too complex. With complexity, comes high costs and deception, as mentioned earlier. The “Sarbanes-Oxley law made it so difficult to list shares on an American stock market that firms increasingly look elsewhere” and these regulations, in general, added a “cost of $10,585 per employee” (The Economist). As a result, this took away from a corporation’s right to gain financial support from investors, as well as causing unemployment due to the high per-employee costs of the act. I agree with this in the sense that regulation laws must have a greater simplicity to them so that they can be understood by a majority, while still allowing the perks of a free-market economy to run their course. Additionally, if a law is too complex, this can lead to deception if it can only be comprehended by a handful of individuals, when the law may affect everyone within the economy. The key here is to find a balance, between governmental regulation and promoting a capitalistic

I predict that the Sarbanes-Oxley Act will have a positive effect on corporate fraud by closing the loopholes that upper management has traditionally taken advantage of. Michael J. Gallagher, chairman of the Center for Audit Quality’s Professional Practice Executive Committee, believes that the Sarbanes-Oxley Act has been successful in reaching its objectives by reducing financial fraud (COHN, 2012). I happen to agree with how Mr. Gallagher feels about the effects of Sarbanes-Oxley Act to date. Nothing is going to eliminate the intentional fraud that is taking place on a daily basis. If a company is trying to hide something, they most definitely will find a way. Chief executive officers without a conscience will always make a bad name for hard working, honest companies that happen to be in big business. With the introduction of Sarbanes-Oxley Act and the guidelines that it sets forth, many companies are realizing that they have been making mistakes unwittingly. I believe that these companies are the biggest contributors to the

A corporation was originally designed to allow for the forming of a group to get a single project done, after which it would be disbanded. At the end of the Civil War, the 14th amendment was passed in order to protect the rights of former slaves. At this point, corporate lawyers worked to define a corporation as a “person,” granting them the right to life, liberty and property. Ever since this distinction was made, corporations have become bigger and bigger, controlling many aspects of the economy and the lives of Americans. Corporations are not good for America because they outsource jobs, they lie and deceive, and they knowingly make and sell products that can harm people and animals, all in order to raise profits.

These companies like Enron caused so many heartaches with the public that nothing will ever be done to help those people that lost everything from these scandals. The Sarbanes Oxley Act of 2002 was the newest regulation guidelines from the government that requires financiers to receive financial information pertaining to securities offered for public sale and it prevents deceit, misrepresentation or any other fraud in securities; hence why it is sometimes called the "truth in securities" law (The Laws That Govern the Securities Industry, 2013). I personally think this will stop a lot of these scandals and will better help the people and corporations in doing the right thing. This Act should better provide implantations of more guarded regulations for accountability of companies. I also think this act will help ensue better ethics into companies, because with all of the scandals being publicized it now becomes everyone's responsibilities in reporting correctly. I think with people seeing these CEO's and executives going to jail; it will make other even not at that level do the right thing or at least report it.

Role of the US Constitution and Legal System in Business RegulationThe Constitution of the United States and their legal system have an impact on the guidance and operation of companies in any industry. In case a person breaks a law, for example, he or she may be obliged to pay a fine or even imprisoned in the US. It works the same way with companies: if a business is found responsible for allowing its employees to violate regulations this company is subject to a fine and even closedown. For instance, companies are responsible to guarantee that all employees are legally authorized to work in the United States. Occasionally employees without proper documentation are able to get a job. The law enforcement agencies perform raids on business

In the Encyclopaedia of White-Collar Crime, co-authors Jurg Gerber and Eric. L Jensen define corporate crime as “violations of federal or state laws that are committed by employees on behalf of the company rather than simply for their own gain.” The definition and classification of what falls under a corporate crime is highly problematic in that corporations can afford defence lawyers that can find loopholes in the legislation in order to avoid charges. Even more perplexing, is that “corporations define the laws under which they live” according to Russell Mokhiber report’s Top 100 Corporate Criminals of the Decade (1996) published in the Corporate Crime Reporter. Mokhiber introduces the example that “the automobile industry... has worked its will on Congress to block legislation that would impose criminal sanctions on knowing and wilful

Since corporations are not physical things or people, it is very easy for them to avoid any kind of trouble. Corporations have become great at passing on their externalities to the public. An externality is an expense of any kind, whether it is something such as environmental damage or forcing people in an area to pay money for something, that a corporation forces the public to pay for while they privatize all profits. Corporations being externalizing machines fit in very well with their psychopathic behavior. They externalize any cost to the public because they can and it helps them achieve their goal of making as much money as possible. A quote from Robert Monks puts it very well, he says “The corporation is an externalizing machine

These three classifications of law affect both business and society, through not only the guidelines defining what is and is not a crime, but also through protection for both. The examples above talked about a car hitting an individual. If it were taken one step further and the car belonged to a business, there are laws in place safeguarding the culpability of the business from the incident since though it is a company car, the company itself was not driving it. Instead the driver and only the driver would be the one at fault, and the victim would have only the driver to seek compensation or prosecution against.

It is well established that good corporate governance practice is beneficial for firms, its stakeholders and whole economy. Further based on studies such as by Levine (2004), saving rates, investment decisions, technological progress and consequently economic growth are encouraged as financial systems reduce market frictions. So developing countries require reforms to stimulate financial system for revival of economy.

Corporation origin from the Latin word Corpus which means body. It is formed by a group of people and has separate rights and liability from those individual. In any means, corporation exists independently from its owner and this principle is called the doctrine of separate personality. Doctrine of separate personality is the basic and fundamental principle in a Company Law. This principle outline the legal relationship between company and its members. Company’s assets belong to the company not the shareholders as assets are the equity for creditors. Company must use up all its assets to pay off the creditors if it became insolvent. The same applies to the corporation’s debts. For limited liabilities company, the shareholder liability is limited which means that the shareholder is restricted to the number of shares they paid and not personally liable for the corporation’s debts. If the company does not have enough equity to pay off debts, the creditors cannot come after the shareholders. However, limited liability company can be very powerful when in hands who do fraud and on defeating creditors’ claims. Courts then can ignore the doctrine for exception cases and lifting the corporate veil. Lifting the corporate veil is a situation where courts put aside limited liability and hold a corporation’s shareholders or directors personally liable for the corporation’s debts.