The legal framework for a business must be fair, protect the rights of businesses and other economic operators, consumers and the State, and ensure a due process to settle disputes between businesses and other economic operators impartially and transparently. However, each legislation adopts its own principles for each country, but we can usually define 6 principles that characterize each legal framework in the field of economic activity. We can define the legal framework of a company as all laws, regulations, ordinances and rules of a legal and mandatory nature that are subject to the economic activities of a company; be able to carry out the production process without presenting any risk or legal consequences for companies or dealers. Although for many entrepreneurs and small business owners, the legal framework of a business is seen as an obstacle, or as they would say colloquially, a loss in the shoe, full of obligations and a lot of taxes and heavy paperwork, the truth is that this is not the case! The legal framework for companies and their business transactions must meet a certain standard of uniformity and clarity, so that legislation must constantly adapt to a new reality of commercial globalization and define as explicitly as possible similar requirements, obligations and rights for simulated situations; Use the same language that helps understand legislation and compliance. A company`s legal framework is integrated through three fundamental areas of law: While they can be easily avoided, legal challenges are one of the main reasons for startup failure. Founders who don`t recognize their legal needs early on might realize at the end of the journey that there`s a fundamental problem with their business. It also helps protect trademarks, patents or factory registrations; A great example of how not to do this properly is the Winklevoss twins, who didn`t legally document the early stages of their social media platform, allowing Mark Zuckerberg to launch Facebook with some of the code he wrote for them. The legal framework of a company is the set of laws, regulations and rules of a legal nature that govern the economic activity of a company, which derives from the constitution of the same and includes first of all the constitution of the country, the Commercial Code, as well as the laws and regulations in commercial, tax and labor matters. Standards provide a common language of communication between businesses, administrations, users and consumers, establish a socio-economic balance between the different actors involved in commercial transactions, form the basis of any market economy and constitute a necessary model of trust between the customer and the supplier.
The legal framework of the company is undoubtedly a fundamental element in building a solid business from the beginning, which guarantees the success and continuity of the ongoing business. However, there are many other laws that make up the legal framework, all of which comply with the constitutional framework, applied according to different criteria characteristic of each company, so you can find more specific laws after: Full compliance with the legal framework, helps to improve business relations with suppliers and customers by keeping everything legally updated, We can expand and conquer new national and international markets beyond local offerings. The legal framework that revolves around a company can be an ally if we know how to use it to our advantage to promote the growth and development of the company. The legal framework does not need to be complex, but it must be effective, legislation must focus its efforts on stimulating the country`s economic activity and facilitate cumbersome processes that could motivate the increase in informal trade and tax evasion. • If the company acquires a loan from a credit institution, it is necessary to know the banking laws and credit institutions, as well as the contractual obligations arising from them. In addition, it is essential to comply with the entire legal framework of the company in order to access financing through the banking system or to attract new business partners. The result is a set of policies, codes of conduct and regulations within which every company must operate; such as the Commercial Code, which regulates the duties and rights of commercial activity, tax laws governing the obligations of taxpayers, labor laws and other laws inherent in economic activity; All in accordance with the constitutional framework of each country. Each social organization has a legal and institutional framework that governs the rights and obligations in relations between its various members. This context starts from the constitution, the law, decrees, regulations, agreements, regulations and resolutions and is expressed in a prohibitive or permissive way.
Therefore, at the beginning of the pre-investment study formulation processes, analysts must identify with some precision the legal and institutional environment in which the project will be carried out in its different phases. The legal framework of a company must be as clear and unambiguous as possible, avoiding in one way or another any legal vacuum that could lead to misinterpretation. In addition, all the rules that make up the legal framework must be sufficiently coherent to avoid contractions between them.