Mount Kenya University

MOUNT KENYA UNIVERSITY
SCHOOL OF BUSINESS
COMPANY LAW
NAME
ADM NO
Corporate law refers to the laws, rules, and regulations that pertain to corporations. The
laws involved regulate the rights and obligations involved with the business activities of a
corporation, including formation, ownership, operation, and management. (Davies, 2017).
Company Law has helped in big Corporations for raking in large amounts of money and
holding a decent amount of power in a particular market. As they become more profitable and
powerful, corporations can start to monopolize markets, meaning they become the exclusive
provider of a particular trade, product, or service.
We need Company laws to cover all of these activities so that businesses can operate
with some measure of predictability. For example, suppose you wanted to open a shoe factory.
You’ll need to buy a piece of property and build your factory, which will be very
expensive. Without established, predictable property laws that ensure that you are the legal
owner of the land, you would be very reluctant to build the factory. There would always be some
risk that someone else would come along and claim your property and factory as their
own. (Davies, 2017).
The rule of law has no simple definition, but in its essence, it’s a concept that means
no one is above the law. The rule of law means that there are clear, understandable rules that
everyone has to follow – citizens, governments and businesses. It’s a way of keeping our
justice system fair and ensuring that everyone complies with the law.
The rule of law gives everyone a framework for how to act and operate. It holds
people, businesses and government accountable for their actions. Without predictable rules
and patterns to follow, doing business would be chaotic. You would never know how another
party would act in any given situation and it would be all too easy to be taken advantage of.
The rule of law provides much-needed stability, consistency and certainty in a potentially
volatile landscape. With the guidelines for universal acceptable behaviour clear and universal,
it’s a lot easier to ensure that organizations act predictably and responsibly.
There are rules in place to ensure that the way you do business is fair to you, your
employees and your community. Everyone has to follow these rules and – ideally – there are
universal consequences if you neglect to do so.
Workplace safety, hiring, wage issues and licensing are just a few areas where some business
owners struggle to tick all the boxes. While the rule of law means that there’s clarity and
consistency in rules and regulations, you still need to learn what the rules are.
In the business industry, company law is very important because of the following ways:
1. Mergers and acquisitions
Mergers and acquisitions refer to transactions in which the ownership of a business is either
transferred or combined with another entity. These actions involve the merging of two business’
assets, liabilities, and potentially the ownership, constituting the help of a corporate lawyer. Not
to mention it can cause a business to grow, downsize, or change in nature significantly.
2. Corporate insolvency
Corporate insolvency occurs when a business’s assets are not sufficient enough to cover
its debts and liabilities. Basically, it means that the company cannot pay off its debts, either due
to not having appropriate forms of payment or they don’t have enough assets.
Should a business run into this problem, there are a couple of options, one of them being
liquidation. To liquidate, in business talk, means to convert any asset into cash or cash
equivalents. In some circumstances, businesses that liquidate their assets have gone bankrupt and
need some cash. In this case, it’s wise to have a lawyer present.
3. Corporate crimes
Then there is the obvious one: when a corporation is accused of breaking a corporate
law. Corporate lawyers are equipped to defend entities in court when they are accused of a crime.
Here are some examples of corporate crimes:
(i) False claims: when someone presents false information to the government to get
money
(ii) Corporate fraud: activities that are dishonest or illegal that benefit the perpetrator
(iii) Antitrust violations: efforts to monopolize a market, such as price-fixing
(iv) Bribery: offering something of value in exchange for a favor that the recipient
would otherwise not do
(v) Insider trading: trading stock with non-public and beneficial information
4. Breaking the law
Because of the significant influence corporations have on the economy, the laws
behind the way they function are taken very seriously. Having knowledge of corporate law as
someone involved in a corporation, especially as a leader, is a good way to keep your business in
check.
We need Company laws to cover all of these activities so that businesses can operate
with some measure of predictability. For example, suppose you wanted to open a shoe factory.
You’ll need to buy a piece of property and build your factory, which will be very
expensive. Without established, predictable property laws that ensure that you are the legal
owner of the land, you would be very reluctant to build the factory. There would always be some
risk that someone else would come along and claim your property and factory as their own.
It’s also important for business owners, managers, and supervisors to understand what
rights the business has against other businesses and individuals. For example, if you have an
employee who is not doing his or her job, you should know your options (Andeans, 2019). If you
make and sell tires, you must know who will be held liable if someone is injured due to a
blowout. If you enter into a contract with another business, you need to know who is bound to
the contract, as well as what happens if those individuals cannot perform what they legally
agreed to do
Business students who study the interaction of law and business can anticipate the legal
needs of their companies and comprehend how laws and regulations can impact businesses in
both positive and negative ways. Andreas E. Meier, a banker who teaches Capital Markets in the
Bakeries program, explains that in many areas of business, laws and regulations are becoming
much stricter than in the past and that individuals working in such areas "need to know how to
integrate [laws and regulations] into [their] process." Professor Natalia Rubberneck, who teaches
International Strategic Management and Trade & Investment, warns that students "need to be
aware that [they] can end up out of business if [they] don't meet legal regulations and the right
norms!" (Parkinson, 2015).
Conclusion
The business world is changing rapidly, and successful business professionals know
how to adapt, learn, and solve problems. The reality of the corporate world is that some
businesses have shorter life spans than others
References
Davies, P. L., & Prentice, D. D. (2017). Gower's principles of modern company
law (Vol. 596). London: Sweet & Maxwell.
Parkinson, J. E. (2015). Corporate power and responsibility: Issues in the theory of
company law. OUP Catalogue.
Andenas, M., Andenæs, M. T., & Wooldridge, F. (2019). European comparative
company law. Cambridge University Press.

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MOUNT KENYA UNIVERSITY

corporation, including formation, ownership, operation, and management. (Davies, 2017).

provider of a particular trade, product, or service.

universal consequences if you neglect to do so.

1. Mergers and acquisitions

Mergers and acquisitions refer to transactions in which the ownership of a business is either

to mention it can cause a business to grow, downsize, or change in nature significantly.

Here are some examples of corporate crimes:

(iii) Antitrust violations: efforts to monopolize a market, such as price-fixing

would otherwise not do

(v) Insider trading: trading stock with non-public and beneficial information

4. Breaking the law

norms!" (Parkinson, 2015).

businesses have shorter life spans than others

Davies, P. L., & Prentice, D. D. (2017). Gower's principles of modern company

law (Vol. 596). London: Sweet & Maxwell.

Parkinson, J. E. (2015). Corporate power and responsibility: Issues in the theory of

company law. OUP Catalogue.

Andenas, M., Andenæs, M. T., & Wooldridge, F. (2019). European comparative

company law. Cambridge University Press.

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