Corporate Governance: Indian Perspective Vis-a-vis International Perspective

June 29, 2010 By Law Library Leave a Comment

 

TITILE

 

Corporate governance: Indian perspective vis-à-vis international perspective.

The word ‘corporate governance’ has become a buzzword these days because of two factors. The first is that after the collapse of the Soviet Union and the end of the cold war in 1990, it has become the conventional wisdom all over the world that market dynamics must prevail in economic matters. The concept of government controlling the commanding heights of the economy has been given up. This, in turn, has made the market the most decisive factor in settling economic issues.

This has also coincided with the thrust given to globalisation because of the setting up of the WTO and every member of the WTO trying to bring down the tariff barriers. Globalisation involves the movement of four economic parameters namely, physical capital in terms of plant and machinery, financial capital in terms of money invested in capital markets or in FDI, technology, and labour moving across national borders. The pace of movement of financial capital has become greater because of the pervasive impact of information technology and the world having become a global village.

When investments take place in emerging markets, the investors want to be sure that not only are the capital markets or enterprises with which they are investing, run competently but they also have good corporate governance. Corporate governance represents the value framework, the ethical framework and the moral framework under which business decisions are taken. In other words, when investments take place across national borders, the investors want to be sure that not only is their capital handled effectively and adds to the creation of wealth, but the business decisions are also taken in a manner which is not illegal or involving moral hazard.

 

Corporate governance therefore calls for three factors:

a) Transparency in decision-making

b) Accountability which follows from transparency because responsibilities could be fixed easily for actions taken or not taken, and

c) The accountability is for the safeguarding the interests of the stakeholders and the investors in the organization.

 

Implementation of corporate governance has depended upon laying down explicit codes, which enterprises and the organisations are supposed to observe. The Cadbury’s code in United Kingdom was the starting point, which led to a number of other codes. In India itself we have the Kumaramangalam Birla code as a result of the committee headed by him at the behest of the SEBI. Earlier we had the CII coming up with the code for corporate governance recommended by the committee headed by Shri Rahul Bajaj. The codes, however, can only be a guideline. Ultimately effective corporate governance depends upon the commitment of the people in the organisation. The very first issue of corporate governance in India is, do the India managements really believe in corporate governance?

Corporate governance depends upon two factors. The first is the commitment of the management for the principle of integrity and transparency in business operations. The second is the legal and the administrative framework created by the government. If public governance is weak, we cannot have good corporate governance. The dramatic Enron case has highlighted how companies, which were the darlings of the stock market and held up as models for vigorous and innovative growth can ultimately collapse like a house of cards as they were based on fraud and dishonesty. The association of the accounting firm Anderson has also raised a doubt about the credibility of even well regarded global players.

In the Indian context, the need for corporate governance has been highlighted because of the scams we have been having almost as an annual feature ever since we had liberalisation from 1991. We had the Harshad Mehta Scam, Ketan Parikh Scam, UTI Scam, Vanishing Company Scam, Bhansali Scam and so on. I have been suggesting that we should learn from especially the United States to see whether we can replicate similar conditions in our capital market. It is not that the United States is free of scams. Right now the Enron issue is examined by a number of committees at different levels in the United States. At the end of all these examinations, they are likely to come with a better

model. In the Indian corporate scene we must be able to induct global standards so that at least while the scope for scams may still exist, we can reduce the scope to the minimum.

I. BRIEF HISTORY

The “revolution” started in the early 1990s with the Cadbury Report on the financial aspects of corporate governance, to which was attached a code of best practice. Aimed at listed companies and looking especially at standards of corporate behaviour and ethics, the “Cadbury Code” was gradually adopted by the City and the Stock Exchange as a benchmark of good boardroom practice. In 1995, the Greenbury Report added a set of principles on the remuneration of executive directors (in response to some particular “fat cat” scandals, notably that involving British Gas chief Cedric Brown, whose 75 per cent rise incensed both unions and small shareholders), and in 1998 the Hampel Report brought the two together and produced the first Combined Code. A year later, the Turnbull Report concentrated on risk management and internal controls.

In each case, the reports were prompted either by shareholder disquiet over perceived shortcomings in corporate structures and their ability to respond to poor performance, or to government threats of legislation if the corporate sector failed to put its house in order.

In 2002 Derek Higgs, an investment banker was given the brief to look again at corporate governance and build on the previous reports to produce a single, comprehensive code. Shortly afterwards, the full consequences of the Enron and WorldCom scandals were realised, leading to new unease. The Higgs Report came out in early 2003, but was greeted with horror by some leading companies, with claims that it placed an unrealistic burden on non-executives and marginalised the role of the chairman. The task of taking Higgs’s draft forward was passed to the Financial Reporting Council (FRC), a body established by government and comprising members from industry, commerce and the professions. The FRC consulted further and produced a revised Code that followed most of Higgs’s recommendations but softened a few of the more contentious points, and so gained general acceptance. With rather less fuss, at the same time Sir Robert Smith, chairman of the Weir Group, was leading a review of the role of audit committees and his recommendations were incorporated into the new Code. The 2003 Code was updated with minor amendments in June 2006, with the new version applying to financial years beginning on or after November 1, 2006.

Report of SEBI committee (India) on Corporate Governance defines corporate governance as the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company.” The definition is drawn from the Gandhian principle of trusteeship and the Directive Principles of the Indian Constitution. Corporate Governance is viewed as ethics and a moral duty. On January 1, 2006, India entered a new era of corporate governance as the reforms popularly known as “Clause 49” took full effect.1 A decade in the making—and complicated by Enron and the other corporate scandals of this time period—Clause 49 has brought broad new requirements related to board composition, audit committee activity, information disclosure, and top management certification. The similarities with Sarbanes Oxley and other governance reforms around the globe should be obvious.

II.         A BRIEF HISTORY OF CORPORATE GOVERNANCE REFORM IN INDIA

Corporate governance and financial regulation in India was generally considered quite poor until the economic reforms of the early 1990s. The Securities and Exchange Board of India (SEBI) was established in 1992 by an act of Parliament, and SEBI was given the job of regulating stock exchanges, brokers, fraudulent trade practices, and other areas of corporate activity.5 As its power grew over the decade, SEBI started to play a much more active role in setting minimum standards for corporate behavior. In addition, a voluntary code of corporate governance was developed by the Confederation of Indian Industry (CII), a group of well-regarded Indian firms.

Near the turn of the century, SEBI commissioned a series of projects to improve Indian corporate governance by building on CII’s code (and by converting the voluntary code into a mandatory one). This work would eventually lead to the Clause 49 reforms. The first SEBI committee, comprised of 17 prominent business leaders and chaired by Kumar Mangalam Birla, advocated a variety of new governance requirements— including a minimum number of independent directors, the creation of audit committees and shareholders’ grievance committees, and additional management disclosures on firm performance.

These recommendations were soon adopted, but, importantly, they were not imposed on every public company through legislation (in contrast with Sarbanes Oxley in the United States). Instead, SEBI implemented the Birla Committee reforms by modifying the listing requirements for firms seeking to go public on an Indian stock exchange. Thus was born Clause 49, a new collection of corporate governance obligations that individual firms would agree to when they signed listing contracts with any stock exchange in the country. As part of a gradual roll-out process, the Birla Committee reforms were not imposed immediately on all public firms. Instead, they were made mandatory in 2001 for the largest Indian companies (and for newly listing firms), and then expanded to smaller public companies over the next few years.

All of this seemed fine until 2002, when fallout from Enron, WorldCom, and other corporate governance catastrophes caused Indian regulators to wonder whether Clause 49 went far enough. SEBI decided to sponsor a second corporate governance committee chaired by Narayana Murthy, the renowned leader of Infosys Technologies. The Murthy Committee went to work and released its additional recommendations in 2003. SEBI quickly adopted these suggestions and issued a revised Clause 49 in 2004.

The Murthy Committee reforms expanded on the Birla Committee’s work in several areas. One main focus related to the qualifications for independent director status: a number of specific requirements were added to disqualify material suppliers and customers, recently departed executives, relatives, and other closely-related parties. A second set of changes affected the audit committee: it was now required to meet more frequently (four times per year), and members had to satisfy new financial literacy requirements. A third important change mandated CEO and CFO certification of financial reports and internal controls. And a number of additional shareholder disclosures, including expanded discussion of financial results, were added to the Clause 49 requirements. As before, these reforms were phased in gradually; all public firms were not required to comply with the Murthy Committee rules until January 1, 2006.

The fruits of this labor were generally well-received, and Clause 49 seems to have improved the overall state of Indian corporate governance. For example, a recent study by Bernard Black and Vikramaditya Khanna argues that stock prices of imminently affected firms jumped almost four percent when SEBI announced its decision to pursue the initial Clause 49 reforms. Similarly, the World Bank as part of its 2005 standards and codes initiative benchmarked India’s regulatory framework to the OECD principles of corporate governance. It announced that India has indeed come a long way over the past decade, reporting that “a series of legal and regulatory reforms have transformed the Indian corporate governance framework and improved the level of responsibility/accountability of insiders, fairness in the treatment of minority shareholders and stakeholders, board practices, and transparency.”

But in this same study, the World Bank also flags four areas of concern. First, many sanctions seem inadequate, and there is a need for stricter enforcement of governance violations in order to increase compliance with Clause 49. Second, the division of regulatory responsibility between SEBI, the Department of Company Affairs (DCA), and the individual stock exchanges needs to be clarified to prevent oversight from slipping between jurisdictional flagstones. Third, board practices need to be strengthened to avoid director “rubber stamping,” especially by establishing credible institutions for training board members on their fiduciary responsibilities.21 And finally, according to the World Bank, institutional investors and large independent shareholders still need to become “important forces to monitor insiders and play a disciplining role in the governance of corporations.”

                  

CONCLUSION

 

The ethical temperature of any business or capital market depends on three factors. The first is the individual’s sense of values. The second is the social values accepted by the business and industry. Let us not forget that when Harshad Mehta Scam took place, it was claimed that the manner in which the bank receipts were being treated was the prevailing norm. Perhaps a similar argument would have been given in the Ketan Parikh Scam. In other words, practices which were later on found to be highly objectionable become acceptable because that was the prevailing market practice. Social values will depend upon the standards set up by professional bodies like the Association of Chartered

Accountants or Cost Accounts of India and so on. The third and perhaps the most decisive factor is the system. It is here we face the main challenge. Our system encourages lack of corporate governance. Some of the specific steps that should be taken to improve corporate governance are the following:

a)         The Sick Industries Companies Act (SICA) has become so convenient for the unscrupulous managements that we find in our country industries become sick, the industrialist do not become sick. BIFR has also been called the Bureau of Industrial Funeral Rites! It is high time we scrap the entire system. This will mean the abolition of SICA and organisations like BIFR there under. Mere tinkering with the system by making amendments is not going to improve the situation.

b)         The entire banking system and the Banking Secrecy Act call for a review. Our banking system is such that if you borrow one lakh of rupees, you are afraid of the bank but if you borrow ten crores of rupees, the bank is afraid of you. With the amount of NPA going beyond 58000 crores, it is high time that we amend the Banking Secrecy Act to reveal those who are willful defaulters. The Narasimham Committee’s recommendation about putting this condition at the time of issuing new loans can cover only to some extent the moral hazard. It is high time that practice of disclosing the name of willful defaulters is made more practical and timely. Publishing the names in the case of suits, which have been filed, is of no value at all because by that time the matter is all but over.

c)         Laws like the Benami Transactions Prohibition Act and the Prevention of Money Laundering Act should be implemented effectively and vigorously. Agencies like the CVC can be used to ensure that corrupt practices are effectively punished because it is the atmosphere, which encourages proper corporate behaviour. In India today we have a system where the level of public governance is very poor. There is no fear of punishment at all. In such a situation it is only a saint who will be observing strictly the rules of corporate governance.

Filed Under Government Tagged With CORPORATE, Governance, INDIAN, International, Perspective, Visavis

Corporate Law

June 27, 2010 By Law Library Leave a Comment

In the current economic climate, it has become imperative for businesses and corporate entities to secure the services of a corporate law firm.  Due to the varied interactions, liabilities and responsibilities of corporate entities in comparison to their smaller business counterparts, it is considered more sensible to utilise a specialist commercial law firm who can service all corporate and commercial law needs under one roof.

When companies grow, their possibilities expand – but so do their requirements for legal representation.  While small businesses can manage with a smaller firm or sole practitioner, this becomes less practical when a company grows.  Large businesses and multi-nationals deal with more varied and substantive legal matters than their smaller counterparts like limited liability companies or partnerships.  For example, company formation, shareholder agreements, acquisitions and disposals, management buy-outs/buy-ins, equity investment, capital restructuring, bank loan agreements and corporate governance. Because companies encounter these diverse situations, most will require the extensive experience of corporate law firms.

Companies can (and often do) have many divisions or branches in their home country or worldwide.  Each company may have operations in diverse areas, and one kind of  lawyer will not be sufficient for every legal matter they encounter.  For example, a distribution company in Dublin may have retained a general commercial lawyer.  However, if that company requires legal services in the areas of asset financing or corporate restructuring, their existing solicitor may not be best placed to advice them on such matters.  A corporate lawyer can be more practical in dealing with varied matters that may require local or international expertise.

On any given day, a company in Dublin could be closing several deals simultaneously with numerous companies in Ireland and beyond.  A corporate law firm can help deal with the many intricacies that can surround complicated contracts and agreements.  Corporate law firms have the necessary staff in-house to provide better, faster assistance over other solicitors who have more of a niche specialty.

In the unfortunate event that a corporation becomes insolvent, retaining a bankruptcy solicitor is a must.  Corporate law solicitors have insolvency and banking and finance solicitors as part of their team who are experienced in advising companies in financial difficulty.  For liquidations, corporate solicitors will help shareholders recover as much of their investment as possible, by helping them reach a fair settlement with debtors.

The ways in which corporate law firms can be of value to companies is manifold.  From day one of a company’s incorporation, its solicitors will help guide the business toward financial prosperity, and have the competence to protect it from troubling lawsuits.  Retaining a commercial law solicitor is a prudent decision for any small business or corporation.

Filed Under Business Law Tagged With CORPORATE

How Attorneys Can Help You Understand and Apply Corporate Law in Your Business

June 20, 2010 By Law Library Leave a Comment

Corporate Law, also known as Business Law or Commercial Law, is considered in Los Angeles, California as one of the hardest and booming fields of law. It would be difficult for a person to understand the technical provisions of Corporate Law without the aid of an attorney who specializes in that area. Here are some of the aspects where Corporate Law attorneys can help one in his business:

In Sole Proprietorship

When one person decides and starts to put up a business without the help of another person, a sole proprietorship exists. The proprietor must understand the existing conditions required by law regarding this type of business. Among others, here are some of the guidelines:

• Where and how to register his own business

• How much capital and how many employees are required by law

• What name and seal should be appropriately used

• When and where should business taxes and dues be paid

• How many years should the business exist

• When and how to file bankruptcy

• What are the modes of extinguishing a sole proprietorship

In Partnership

There is an existing partnership when two or more persons decide and agree to put up a business together and share in the profits generated as well as the losses obtained by such, equally or otherwise. Unlike sole proprietorship, more people participate in decision-making regarding the affairs of the partnership. Here are some of the guidelines which must be taken into account by the partners:

• Where and how to register the partnership

• What are the minimum and maximum number of partners required by law

• What contains the Articles of Partnership

• What is the minimum capital required by law

• What is the lifespan of the partnership

• What are the types of partners

• How profits and losses are distributed among partners

• When is a partnership considered as bankrupt or liquidated

• What modes extinguish a partnership

In Corporation

A corporation exists when a number of persons, not being partners, decide and agree to create a business or an association, having its own juridical identity and juridical personality separate and distinct from its incorporators. Some of the guidelines that should be taken into account by the incorporators are the following:

• What are the corporate names allowed by law

• What are the maximum and minimum number of incorporators

• What should be the nationality of the incorporators as well as the corporation itself

• What should contain its By-Laws

• Who should be its Board Members and its Officers

• What are its Mission and Vision

• What is its lifespan

All three types of business, which exist and are widespread in Los Angeles, require careful and meticulous compliance of the Corporate Law. Nonconformity with the law is enough ground for one to lose his establishment. This only means that a person or a group who are planning to put up and maintain a business ought to avail the services of a Corporate Attorney who are skilled in this field of law.

A Corporate Attorney would be able to aid them as they draft their contracts and other legal documents, manage their affairs with clients and other firms, settle disputes and grievance machineries, observe rules and regulations required by the government, meet demands of their employees, and liquidate and extinguish their transactions. Without first consulting with an attorney, firms have a high risk of committing legal errors and this is fatal to their business.

In issues involving corporate and business laws and related concerns, you can consult with our knowledgeable Los Angeles corporate law attorneys. You can visit our website to avail of our free case analysis.

Filed Under Business Law Tagged With Apply, Attorneys, Business, CORPORATE, Help, Understand

Corporate Governance

June 18, 2010 By Law Library Leave a Comment

Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large.

Corporate governance is a multi-faceted subject.[1] An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focus on the impact of a corporate governance system in economic efficiency, with a strong emphasis on shareholders welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world (see section 9 below).

There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large U.S. firms such as Enron Corporation and Worldcom. In 2002, the US federal government passed the Sarbanes-Oxley Act, intending to restore public confidence in corporate governance.

In A Board Culture of Corporate Governance business author Gabrielle O’Donovan defines corporate governance as ‘an internal system encompassing policies, processes and people, which serves the needs of shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity and integrity. Sound corporate governance is reliant on external marketplace commitment and legislation, plus a healthy board culture which safeguards policies and processes’.

O’Donovan goes on to say that ‘the perceived quality of a company’s corporate governance can influence its share price as well as the cost of raising capital. Quality is determined by the financial markets, legislation and other external market forces plus the international organisational environment; how policies and processes are implemented and how people are led. External forces are, to a large extent, outside the circle of control of any board. The internal environment is quite a different matter, and offers companies the opportunity to differentiate from competitors through their board culture. To date, too much of corporate governance debate has centred on legislative policy, to deter fraudulent activities and transparency policy which misleads executives to treat the symptoms and not the cause.’[2]

It is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs.

Report of SEBI committee (India) on Corporate Governance defines corporate governance as the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company.” The definition is drawn from the Gandhian principle of trusteeship and the Directive Principles of the Indian Constitution. Corporate Governance is viewed as ethics and a moral duty.

Impact of Corporate Governance

The positive effect of good corporate governance on different stakeholders ultimately is a strengthened economy, and hence good corporate governance is a tool for socio-economic development.[4] After East Asian economies collapsed in the late 20th century, the World Bank’s president warned those countries, that for sustainable development, corporate governance has to be good. Economic health of a nation depends substantially on how sound and ethical businesses are.

Parties to corporate governance

Parties involved in corporate governance include the regulatory body (e.g. the Chief Executive Officer, the board of directors, management and shareholders). Other stakeholders who take part include suppliers, employees, creditors, customers and the community at large.

In corporations, the shareholder delegates decision rights to the manager to act in the principal’s best interests. This separation of ownership from control implies a loss of effective control by shareholders over managerial decisions. Partly as a result of this separation between the two parties, a system of corporate governance controls is implemented to assist in aligning the incentives of managers with those of shareholders. With the significant increase in equity holdings of investors, there has been an opportunity for a reversal of the separation of ownership and control problems because ownership is not so diffuse.

A board of directors often plays a key role in corporate governance. It is their responsibility to endorse the organisation’s strategy, develop directional policy, appoint, supervise and remunerate senior executives and to ensure accountability of the organisation to its owners and authorities.

The Company Secretary, known as a Corporate Secretary in the US and often referred to as a Chartered Secretary if qualified by the Institute of Chartered Secretaries and Administrators (ICSA), is a high ranking professional who is trained to uphold the highest standards of corporate governance, effective operations, compliance and administration.

All parties to corporate governance have an interest, whether direct or indirect, in the effective performance of the organisation. Directors, workers and management receive salaries, benefits and reputation, while shareholders receive capital return. Customers receive goods and services; suppliers receive compensation for their goods or services. In return these individuals provide value in the form of natural, human, social and other forms of capital.

A key factor in an individual’s decision to participate in an organisation e.g. through providing financial capital and trust that they will receive a fair share of the organisational returns. If some parties are receiving more than their fair return then participants may choose to not continue participating leading to organizational collapse.

Internal corporate governance controls

Internal corporate governance controls monitor activities and then take corrective action to accomplish organisational goals. Examples include:

Monitoring by the board of directors: The board of directors, with its legal authority to hire, fire and compensate top management, safeguards invested capital. Regular board meetings allow potential problems to be identified, discussed and avoided. Whilst non-executive directors are thought to be more independent, they may not always result in more effective corporate governance and may not increase performance.[5] Different board structures are optimal for different firms. Moreover, the ability of the board to monitor the firm’s executives is a function of its access to information. Executive directors possess superior knowledge of the decision-making process and therefore evaluate top management on the basis of the quality of its decisions that lead to financial performance outcomes, ex ante. It could be argued, therefore, that executive directors look beyond the financial criteria.

Remuneration: Performance-based remuneration is designed to relate some proportion of salary to individual performance. It may be in the form of cash or non-cash payments such as shares and share options, superannuation or other benefits. Such incentive schemes, however, are reactive in the sense that they provide no mechanism for preventing mistakes or opportunistic behaviour, and can elicit myopic behaviour.

External corporate governance controls

External corporate governance controls encompass the controls external stakeholders exercise over the organisation. Examples include:

demand for and assessment of performance information (especially financial statements)

debt covenants

government regulations

media pressure

takeovers

competition

managerial labour market

telephone tapping

 

Codes and guidelines

Corporate governance principles and codes have been developed in different countries and issued from stock exchanges, corporations, institutional investors, or associations (institutes) of directors and managers with the support of governments and international organizations. As a rule, compliance with these governance recommendations is not mandated by law, although the codes linked to stock exchange listing requirements may have a coercive effect.

For example, companies quoted on the London and Toronto Stock Exchanges formally need not follow the recommendations of their respective national codes. However, they must disclose whether they follow the recommendations in those documents and, where not, they should provide explanations concerning divergent practices. Such disclosure requirements exert a significant pressure on listed companies for compliance.

In the United States, companies are primarily regulated by the state in which they incorporate though they are also regulated by the federal government and, if they are public, by their stock exchange. The highest number of companies are incorporated in Delaware, including more than half of the Fortune 500. This is due to Delaware’s generally business-friendly corporate legal environment and the existence of a state court dedicated solely to business issues (Delaware Court of Chancery).

Most states’ corporate law generally follow the American Bar Association’s Model Business Corporation Act. While Delaware does not follow the Act, it still considers its provisions and several prominent Delaware justices, including former Delaware Supreme Court Chief Justice E. Norman Veasey, participate on ABA committees.

Filed Under State Government Tagged With CORPORATE, Governance

A Career In Corporate Law

June 6, 2010 By Law Library Leave a Comment

Qualifications


To be a lawyer, one needs to be a qualified in the field of law. To be a graduate in law, it takes four years in undergraduate school and three years’ specialization in law through a law school. In this case, specialization would be in corporate law. To practice law, you need a license. To get the license, you first need to pass the bar exam – an examination that will test your knowledge, character and attitude. After the test, students are then recruited by law firms.


Junior Corporate Associate


As a junior corporate lawyer, you will be learning things the hard way. As a junior corporate associate, you have to do the grunt work of organizing documents, faxing, proofreading, copying, scheduling meetings, etc. In addition to these, the junior associate also has various other duties. These duties can be classified into various categories such as drafting contracts and conducting reviews, preparing filings, due diligence and writing of memoranda. A lot of a junior associates’ time is spend doing research work. A lot of trial and error work goes on into drafting contracts, security disclosure statements and corporate resolutions – and these are things that are not necessarily taught in law school. The junior associate, at times, has to spend a lot of time proofreading.


A law firm may later offer a junior associate the role of a partner. This involves working on individual projects and having junior associates working for you. So to be a good corporate leader, you will need to be hard working, diligent and possess excellent problem solving skills. A corporate lawyer gets paid extremely well, but the job it involves a lot of hard work. Many corporate attorneys work in excess of 60 hours a week.


What Does A Corporate Lawyer Do?


A corporate lawyer mostly works in the legal department of a business, as a legal advisor. Their work includes dealing with issues of taxes, employee rights, amalgamations, mergers and acquisitions. In short, a corporate lawyer has to ensure the legality of commercial transactions. There are other types of practice a corporate lawyer could undertake, and not all lawyers do the same type of job. Some provide advice on legal or/and non-legal issues to the corporation. In this area, the work of a corporate lawyer starts from the formation a corporation and goes on through the life of the business. Until it is dissolved.


The articles of incorporation of a company (i.e. the documents that deal with the formation of the corporation and the structure of the management, of its internal affairs) are drafted by the corporate lawyer. They also have to investigate the best entity for a particular business (i.e. partnership, limited liability partnership, limited liability companies).


Each corporate lawyer’s duties are different, and this adds to the appeal of the profession. Because each entity has its own set of responsibilities, rights, tax structure and organizational structure, corporate lawyers have to be resourceful and persistent in their work. If this is you, and you have the stamina to undertake a rigorous educational program and then pass the bar exam, then a career in corporate law may be right for you.

Filed Under Business Law Tagged With Career, CORPORATE
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