What is the legal environment?
The legal environment refers to the laws, rules, regulations, and legal systems that coordinate to operation of businesses and organizations. It is the most prominent prosperity for the run of a business. It encompasses both formal and informal rules that regulate commerce, employment, contracts, organization, and so on. It directs the various aspects of the business like decision-making, production, and marketing activities. It provides the structure for resolving issues, enforcing rights and obligations, maintaining stability, coordinating subordinates, etc. It covers all the legal provisions which affect the business activities of the business people.
Koontz and Fulmer “Legal environment are the various laws, court decisions, and government regulations that influence our lives and business operations.”
F.W. McCarthy and J.W. Bagby ” The legal environment of business is generally concerned with the study of legal institutions and processes that affect business activities activities and with the law that affect the atmosphere or environment in which business activities are concerned.”
A well-functioning legal environment fosters the participants and motivates them to promote the business venture. On the other hand, it restricts entrepreneurs what should be done and what should not be done. For the creation of the business, entrepreneurs accept all the laws within the conditions of the business and make the business plan under the laws with flexibility. Cause if flexibility is not considered in the business, it may ruin the business venture.
It helps to progress the business. Legislative framework provides a way to form the business structure and also provides opportunities and threats in the business market. Laws are changeable with the nature of political, social, economic, and other environment. Adapting such legal matters businessmen start, manage, and grow the business in the competitive market.
Laws of Legal Environment
General Business Laws
There are different kinds of business laws, that help to perform business activities. It can be described as follows.
Private Firm Registration Act, 1958 (2014)
The Private Firm Registration Act, of 1958 (2014) is a piece of legislation that deals with the provisions of registration and regulation of private firms. All types of sole trading concerns are registered under this act. Once registered the private firm gains a distinct entity causing the firm to enter into the contract and own property.
Partnership Act, 1964 (2020)
The Partnership Act, of 1964 (2020) deals with provisions of formation, operation, and dissolution of partnership firms. All the partnership firms are registered under this act with the concerned agency of the government. This act provides the rights and duties of partners within the partnership.
Company Act, 2006 (2063)
All the companies are governed by the Company Act, of 2006. Companies are generated and regulated by this act. It defines the rules and regulations of the company and also sets the liability limits of the shareholders.
Cooperative Act, 1960
The Cooperative Act, of 1960 deals with the cooperatives in Nepal. It provides provisions for the formation and operation of cooperatives.
Industrial Enterprise Act, 1992 (2049)
This act is a piece of legislation that deals with the establishment of industrial units. It variously categorizes industries like manufacturing industries, service industries, tourism industries, mineral industries, forest-based industries, and so on. This act provides provisions related to registration, operation, promotion, facilitation, concessions, etc. concerned with industry.
Contract Act, 2000
The Contract Act, of 2000 deals with matters concerned with the contract. It set up the guidelines on how to make a contract.
Arbitration Act, 1999
This act is used for the settlement of disputes related to the business. Based on rules and regulations, it provides a bridge between the disputed parties.
Labor Laws
Labor Act, 1992 (2048)
This act is concerned with the labor or employees. It provides the rights, duties, facilities, safety, etc. to the workers who work in different sectors. This act is prominent for the welfare of the laborers.
Trade Union Act, 1992 (2049)
The Trade Union Act, of 1992 provides provisions to deal with the trade union. It manages the professional and occupational rights of the employees and supports the increment of their status.
Industrial Training Act, 1982 (2039)
This act deals with the requirement of workers’ training for industrial work. The development of workers’ skills helps to increase the industrial progress and professional proficiency of the workers.
Bonus Act, 1974 (2030)
The Bonus Act, of 1974 deals with the payment of bonuses for the workers. Certain criteria, requirements, profit of the company, etc. define the bonus of the workers. The company must provide a bonus if they earn a certain profit in the required manner.
Child Labor Act, 2000 (2057)
This act regulates and prohibits child labor in the industrial or factory sector. It is the focus on child labor that should not be used as the worker.
Obtaining Intellectual Property Rights
Intellectual property is a valuable asset for the entrepreneurs. It is a brand of competent workers. It is the creation of the entrepreneurs or their staffs which has legal property rights.
William Bygrave and Andrew Zacharaki’s “Intellectual property refers to creations of the mind, such as inventions; literary and artistic works; and symbols, names, images, and designs used in commerce. Intellectual property includes patents, trade secrets, trademarks, and copyrights.”
Patents
Patents are the legal instruments granted by the government to the inventors for exclusive rights to their invention for a fixed period.
Hisrich and Peters “A patent is a contract between the government and an inventor. In the exchange for disclosure of the invention, the government grants the inventor exclusivity regarding the invention for a specified amount of time.”
Trademarks
Trademarks are the symbols, phrases, words, designs, or combinations of them to identify their products and differentiate them from others in the marketplace. This kind of identity is known as a brand. Entrepreneurs use unique names or symbols to market products, which makes the customer purchase them.
For example, Coca-Cola is a trademark whose value is undefinable. It is a brand for Coke Corporation.
