Purpose Of Corporate Law

While the modern corporation has often been vilified, and with good cause, it has been the primary driving force behind all major technological advances over the last four hundred or so years. Previously, advances in technology were mere curiosities which did not have a proper method for mass production and therefore slow to spread around the globe. The corporation takes such technologies and ideas and, in the pursuit of profit, mass manufactures them for large consumption.

However, there are tradeoffs to these advancements. The corporate culture has stifled cottage industries and small business growth, not to mention turning previously skilled professions into one action jobs. Further, in the pursuit of profits, corporations have caused some of the worst slums known to man to develop.

In the late 19th century United States for example, industries like the railroads and oil refineries, were virtually unregulated. As a result, massive monopiles developed, in which the very few corporations left standing were free to impose whatever costs they wanted on their product and treat their workers like disposable resources. It was in this atmosphere that massive grassroots efforts, as well as some government cooperation led to the imposition of the first series of corporate laws and regulations. The most widely known of these were the anti-trust statues and labor statues.

However, over regulation also disadvantages growth. Big corporations are easily able to afford professional like accountants and lawyers to ensure compliance with government regulations. Small corporations find it harder to pay for such services and as a result either struggle or fail if they are unduly burdened by such laws.

The role of any effective corporate law regime therefore is to ensure that a competitive and fair environment is fostered, while simultaneously ensuring that the drive for corporate profits causes societal ills. Balancing out these competing interests is no easy task.

The invention of the publicly traded stock company has further complicated this already difficult area of the law. These corporations operate primarily on the trust of the public. In order to maintain this trust it is important that the directors of these corporation are held to strict financial and disclosure obligations so that the owners are not deceived. On the other hand, these obligations cannot be so onerous that thy stifle the growth of business.

Finally, corporate law has to consider who bears the legal liability when a corporation breaks the law. It has long been understood in Canadian law that a corporate entity is a separate legal “person”. However, it is very much the case that a corporation is not in fact a living, breathing human being. If a corporation deceived its shareholders, or committed a crime, it was in fact an individual or several actual persons who took the actions which caused those laws to be broken. To what extents should the corporate structure protect such persons?

Corporate law is usually understood as one of the most difficult areas of law. If you are considering incorporating, it is best to do so through a lawyer to ensure that such an act is in your best interest.

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Arkadiusz J. Empel urodził się w Katowicah. Jako dziecko emigrował do Kanady, razem z rodziną, lecz wrócił jako student aby ukończyć Pracę Magisterską w Krakowie. Przez swoją pracę z polonią w okolicy Toronto utrzymał władność w swojim języku ojczystym. Jeżeli Państwo życzy się skonsultować prosto z adwokatem Polski, proszę przedzwonić na numer 416-500-1937.