There has been a lot of confusion when it comes to differentiating between business law and corporate law. While corporate law focuses on the legal aspects that govern the sale and distribution of goods, commercial law covers legal aspects used in acquisitions, mergers, company formation and shareholder rights. There are differences between corporate lawyers and business lawyers, although some people use the terms interchangeably. Corporate lawyers manage the rules, regulations and laws related to the formation and operation of corporations.
Business lawyers manage interactions between companies and individuals, including clients and employees. Business lawyers provide legal advice on local laws and regulations, contract review, personnel policies, and other matters. Corporate law refers to the activities of the corporation itself; business law refers to the activities of the company. Examples of business entities may include corporations, limited liability companies (LLCs), and sole proprietorships.
The laws of the state of incorporation normally govern the internal operations of a corporation, even if the corporation's operations take place outside that state. Of the two laws, only Commercial Law incorporates laws relating to financial transactions, taxes and marketing processes. The term refers to the legal practice of law related to companies, or to the theory of companies. All companies and organizations require both business law and corporate law to streamline their functions.
The difference between a corporate lawyer and a business lawyer can be determined by looking at their specialties. Government and other entities play a role in regulating business and corporate law and operations. Under corporate law, companies of all sizes have separate legal personality, with limited or unlimited liability for their shareholders. Reducing the risks of this opportunism, or the cost of the agency, is said to be fundamental to the objective of corporate law.
And many jurisdictions also allow transactions to be challenged for lack of corporate benefit, when the relevant transaction has no prospect of being for the business benefit of the company or its shareholders. Companies can issue different types of shares, called share classes, which offer different rights to shareholders based on underlying regulatory rules related to corporate structures, taxes, and capital market rules. Despite the variations and differences between business law and corporate law, they share similarities. While the meticulous nature of corporate governance embodied by the rules of stock ownership, capital markets, and corporate culture differs, there are similar legal features and legal problems in many jurisdictions.
Because corporations are a type of business entity, there can be some overlap between business law and corporate law. Most jurisprudence on the subject of corporate governance dates back to the 1980s and mainly addresses hostile acquisitions, however, current research considers the direction of legal reforms to address the problems of shareholder activism, institutional investors and intermediaries of the capital market.