How Does Business Transaction Law Fit in With Running a Company?


Business transaction law covers issues that operate at the highest level of a company. When you form, disband, sell, transfer, grow, or modify the organization, for example, you may need business transaction law services. These are the big concerns that determine much of how you will use a business, and it's important to understand these four ways the law influences an operation.


Foremost, when you form a corporation, the type you choose will determine what level of liability you assume. One of the main reasons a person usually moves from running a sole proprietorship in the earliest days of a business to an LLC is to contain liability issues. Without a corporate charter, your business opens you up to personal liability if your company is sued or ends up in bankruptcy. Once you move into the corporate world, liability for the business stops with the company.

Decision-Making and Rights

As an organization becomes more highly structured, it generally transmits more rights to more parties. This influences who can make decisions and how they make them. An LLC might only have one person in all decision-making roles, but a shareholding company could have thousands or millions of folks who have votes. Such highly structured companies usually have boards, CEOs, and other officers who deal with day-to-day concerns while reporting to the board and the shareholders.

Each change in corporate structure runs into business transaction law, too. New charters have to be devised, and old stakeholders have to be moved out of roles. The same applies when you merge companies or even terminate one.


Within a corporate environment, many elements of business transaction law decide what happens when someone must succeed in a post like CEO or CFO. Does the board have a say, and if so, when do they convene to handle it? Who is the successor, and how long can they serve in that role before board members and shareholders must be notified and gathered for a vote?

Money and Accounting

The structure of a company determines many elements of how it handles money and accounting. Right down to the types of banking and investment accounts the company can have, it all starts with business transaction law. As you take on liabilities and debts, corporate structure and transactions shape the organization's future. You'll also pay taxes based on these decisions. Even your legal right to use its money for growth and acquisitions boils down to the regulations that govern the specific type of enterprise you're running.


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