Corporate law and commercial law are both essential components of business operations, but they serve different purposes. Through articles like these, we want to make sure you know when to seek legal support so that you protect your business and position it correctly for your growth plans.
So what is corporate law?
Corporate law deals with the formation, governance and dissolution of companies. It governs the internal structure of a business and how it is managed, ensuring regulatory compliance and protecting the interests of shareholders and directors. Key areas of corporate law include:
1. Company formation: Deciding whether to structure a business as a limited company, partnership, or other legal entity. This affects tax obligations, liability, and how profits are distributed.
2. Shareholder agreements: Outlining the rights and responsibilities of shareholders, including voting rights, dividend distribution, and procedures for transferring shares.
3. Mergers and acquisitions (M&A): When one company buys or merges with another, corporate law governs the negotiation and legal processes, ensuring the deal is structured to minimise risk and maximise benefits for all parties.
4. Corporate governance: This covers the responsibilities of the board of directors and the rights of shareholders, ensuring transparency and accountability in decision-making processes. These are often, at least in part, determined by your articles of association.
How does this differ to commercial law?
Commercial law, on the other hand, deals with the day-to-day operations and transactions of a business. It’s widespread and encompasses a wide range of areas, from contracts to intellectual property.
Key areas you’re likely to come across include:
1. Contract law: This governs the agreements businesses make with suppliers, customers, and partners. Contracts outline the terms and obligations of each party, ensuring that goods, services or payments are delivered as agreed.
2. Trade and sales law: This involves the buying and selling of goods and services, covering areas like terms of sale, warranties, and liability for defective products.
3. Intellectual property (IP) law: Protecting your brand, patents, and trademarks is crucial in any business. IP law ensures that your creations and ideas are legally safeguarded.
4. Employment law: Managing staff effectively involves complying with laws that govern contracts, workplace safety, and employee rights.
When might you need legal support?
Law is such a huge sector that solicitors will often specialise in particular areas. That means that whilst finding a law firm that understands commercial law is great, if they’re unfamiliar or uncomfortable with corporate law, you’ll need to find support elsewhere.
Here are a few examples of different business activities and the legal expertise you’ll need to engage
1. Forming or restructuring a company | Corporate law: When starting a business or changing its structure (e.g., converting from a partnership to a limited company), corporate law expertise ensures everything is compliant with regulations.
2. Drafting contracts | Commercial law: Whether negotiating with suppliers, clients or employees, ensuring that contracts are fair, enforceable, and protect your interests is vital.
3. Mergers, Acquisitions or Exits | Corporate law: Corporate law specialists ensure that business sales, acquisitions, or mergers are legally sound, protecting all parties from future disputes or liabilities.
4. IP and data protection | Commercial law: Commercial law advice is crucial for businesses wanting to protect their intellectual property, manage GDPR compliance, or develop a privacy policy.
In summary
While corporate law focuses on the structural and governance aspects of a business, commercial law deals with its day-to-day transactions. Both are crucial to ensure the smooth running and success of a company. Seeking expert legal advice in these areas ensures that businesses remain compliant, protected, and well-positioned to achieve their long-term goals.
If you need a legal partner to help you navigate commercial and corporate matters as your business grows, get in touch with Jamieson Law here and we’ll arrange a free discovery call to map out the best next steps.
