Corporations routinely face a number of legal issues related to company governance, operations, and regulatory compliance. Naturally, the type or nature of legal issues affecting a company will vary depending on the operations of the company, the industry, the size or company structure, and many other fiscal and operational aspects. Some of the most common legal areas and regulatory procedures relevant to a corporation include:
All corporations are subject to numerous federal or state regulations. Regulations are promulgated by administrative agencies in furtherance of statutes created by the legislative branch of the state and federal government. Further, administrative agencies develop regulatory procedures when enforcing federal and state regulations. Businesses affected by these regulations must comply with these substantive and procedural standards. Common regulations include financial disclosure, equity valuation, and employment standards. Regulations generally entail administrative filing requirements and red tape. The regulatory procedures of the company requires analysis, issue-spotting, and strategic development.
Corporate governance concerns complying with state reporting or disclosure requirements and carrying out the procedures associated with internal decision-making and shareholder rights. The majority of corporate governance procedure comes from state law. All state regulation has a corporate code modeled off of the Model Business Corporations Act or Delaware state law. While there are certainly many substantive corporate governance laws, much of corporate governance is procedural in nature. More specifically, corporate governance generally includes complying with voting, meetings, record retention requirements, information disclosure (to shareholders and the public). The primary point of disclosure concerns the company’s financial statements. Many states regulations require a corporation to file their financial statements publicly. If the company is public, the Securities and Exchange Commission requires extensive annual disclosures to shareholders and to the public through filing with the agency. More complex state corporate governance issues include business transactions, derivative litigation, mergers or acquisitions, or altering the governance documents.
All businesses become subject to litigation (either as plaintiff or defendant) at some point. The United States is generally known to be a very litigious society. The most common type of litigation results from injuries occurring on company property. Businesses are frequently the target of plaintiff suits by virtue of their resources. Further, businesses are routinely affected by litigation with suppliers or other business partners. This most generally results from misunderstandings or breaches of contract. Falling under the aegis of litigation is collections of debts owed to the corporation.
Employment Law Issues
Corporations frequently hire or fire employees. It is common for company employees (managers) to take actions that might run afoul of applicable employment discrimination laws. The major federal laws come from the Civil Rights Acts of 1866 and 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act. For example, basing a hiring decision on someone’s race, gender, ethnicity, color, age, or national origin can give rise to employment discrimination claims. Further, the company governance may be required to comply with numerous employment laws, such as EEOC regulations, workers compensation claims, health insurance coverage, state regulations and unemployment claims.
Accounting and Tax Matters
Companies are legally required to maintain accounting records for shareholder and public disclosure as well as for tax filing purposes. Accountants manage the accounting process which records revenues generated and costs incurred. These measures will ultimately determine the tax liability of the company. Attorney frequently strategize tax deferment or avoidance in transactions affecting the company.
Working with LawTrades
Corporations are affected by a long list of general and industry or business-specific legal standards. You should always work with a professional when determining what laws affect the company governance and regulatory procedures. LawTrades can provide you all the information and legal issues you may need in this process.