Major characteristics of corporate law

Corporate law mainly concerns itself with the laws, regulations, rules and various practices that regulate how corporations form and operate. These involve all kinds of rights and obligations of all the parties involved in owning and managing such business. It’s important to note that a corporation is a separate legal entity and can conduct business in its own name. According to a corporate law firm in Lithuania, there are five main principles when it comes to corporate law.

 

Legal personality

 

A separate entity has all the assets of the owners. This entity can use these assets and even sell them, but creditors can’t take them back so easily. They have to form their own entity.

 

Limited liability

 

Limited liability lets owners take risks and diversify their investments as legal structures can’t go after an owner’s personal assets. This can come in handy when a corporation gets sued as only the corporation’s assets are on the line.

 

Transferable shares

 

This is another principle, pointed out by a corporate law firm in Lithuania. If an owner no longer wants a share in the business, the whole company doesn’t have to shut down. The owners can transfer the shares as easily as ownership of a partnership.

 

Delegated management

 

These types of businesses have a defined structure on how to conduct affairs. A board of directors and officers share decision-making. Board members monitor the officers and are responsible for ratifying their decisions. Officers do the day-to-day work: they conduct transactions and such.

 

Investor ownership

 

A corporate law firm in Lithuania notes that owners don’t directly run their companies, even though they have a say when it comes to decision making. They typically vote for board members and their decision-making authority is proportionate to their ownership interest.

 

These corporate laws are necessary to keep all these companies on the same playing field level. The core idea of them is to make it easier for corporations to do business in a fair way for everyone.