Business Law Essentials: Key Concepts and Legal Framework
Business Law Essentials
Business: The activity of making, buying, selling, or supplying goods or services for money.
Law/Legal Ordering: An order of humans which sets a set of rules to resolve the “conflicts of interest” that may arise. It has a base which is based on a series of beliefs and values. These laws provide freedom, security, and peace. However, we need an organization to enforce those rules.
Large Institutions
A large, important organization that has a particular purpose. The main function is favoring the progress of society and understanding the development of complex cooperations. Laws with no institutions to enforce are useless, so institutions are essential.
Key Elements to Start a Business Project (Tax Law is Omnipresent)
- New Product / Service Idea → IP Law
- Finance → Contract Law
- Incorporation → Company Law
- Key Employees → Labor Law
- Marketing → Competition Law
- Growth Strategy → International Law
- Accounting → Tax Law
- Website and e-commerce → IT Law
Financing the Company: Debt vs. Equity Financing
Equity Investment: Types of investors (e.g., business angels) and Venture Capitals
Debt Financing: Participative Loans, Convertible Instruments, Bridge Loans
Types of Companies
Personalist companies / Capitalist companies / Limited liability company / Anonim society
Incorporation
- Register the name of the company
- Open a bank account in the name of the company
- Drafting of the “BY-LAWS”
- Public Deed of Incorporation
- Declaration of foreign investments
- TAX
- Registration in the Commercial Register
- Obtaining the NIF
- Registration at the I.A.E.
- Census declaration (VAT)
Company Criminal Liability
A company will be criminally liable: In the case of offenses committed in its name or on its behalf, and for its direct or indirect benefit, by its legal representatives and administrators, in fact or in law. For crimes committed by employees, in the exercise of social activities and on behalf of and in direct or indirect benefit of the company.
Contract
An agreement between two or more persons which is legally binding.
Obligation
Creditor’s right to obtain from the debtor a performance to give, to do, or not to do something, guaranteeing performance of the obligation with all the assets of the debtor.
- Active: Demands the performance → Creditor
- Passive: Obligated to perform the obligation → Debtor
Going Public
Advantages:
- Improvement in the ability to obtain financing and reduction of its cost
- Greater brand recognition and prestige
- Liquidity for shareholders
- Facilitate the recruitment and remuneration of managers
Disadvantages:
- Cost of going public and maintaining the company on the stock market
- Focus on short-term results and not long-term
- Loss of control of the company
Fixed vs. Variable Remuneration
Differences: Fixed salary is paid on a monthly basis and usually includes the salary items set out in Collective Bargaining Agreements (“CBA”) and/or Company Agreements. Variable salary is usually agreed individually and is based on personal or company performance. The time of payment is usually agreed between the parties.
Company Obligations
Information / Data protection / Personal data / Security breaches / Files / Recording
Types of Contracts
Links / Purpose / Nature / Compliance / Regulations