CHAPTER 06

LEGAL ENVIRONMENT

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LEARNING OBJECTIVES
 To understand the changing role of governments in
the business environment
 To identify legal and political environmental factors
and their implications for business relations
 To explain the idea of legal and political risks faced
by companies doing business overseas
 To understand the international legal framework as it
impacts on business activities
 To understand the Indian legal framework for
business

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The Legal Environment and
Business
 The domestic laws of the home country
 The domestic laws of each of the foreign
markets
 International law in general

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Legal Risks and Global
Business Issues
 Expropriation
 Legal provisions
 Treaties and agreements
 Transparency and regulation

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Indian Legal System- Unique
Features
 Framed by the people of India
 Derived from various sources
 Sovereignty of the people
 Republican polity
 Secular polity
 Fundamental rights and duties

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The Law of Corporations
 Private limited companies
 Public Company

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Incorporation Formalities
1.Selection of name of the company and getting it
approved from the RoC. Upon scrutiny and
satisfaction, the RoC issues a name availability
letter.
2. After the name is approved, memorandum and
articles of association (MoA) are drafted.
3. MoA along with other necessary documents are filed
with the ROC. The filing fees are dependent on the
authorised share capital of the company.
4. After scrutinising the documents, the ROC issues a
certificate of incorporation.

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Winding Up of Corporations
 Voluntary winding up
 Winding up under orders of the court
 Declaration as a defunct company

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Industries (Development and
Regulation) Act, 1951 - Objectives
 To take necessary steps for the development
of industries
 To regulate the pattern and direction of
industrial development
 To control the activities, performance, and
results of industrial undertakings in the public
interest

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Intellectual Property Rights
(IPR) Protection in India
 Trademarks
 Copyrights
 Foreign works
 Patents

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Legal Environment and
Consumer Protection in India
 Consumer rights:

1. Right to safety
2. Right to information
3. Right to choose
4. Right to be heard
5. Right to seek redressal
6. Right to consumer education
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The competition commission
of India
Regulatory and quasi-judicial powers of
commission

 Eliminate practices having AAE on

competition
 Promote and sustain competition
 Protect interests of consumers
 Facilitate competition advocacy and spread
awareness

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Transfer of Technology
 Royalty
 Payment for designs and drawings
 Payment for engineering services
 Technical know how fees

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Structuring of Cross-Border
Business in India

 Liaison office
 Branch office
 Project office

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International Legal
Environment and Trade Issues
 International Law in General
The body of rules which regulates
relationships between countries or other
international legal persons.

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International Legal
Environment and Trade Issues
 Incoterms
Incoterms define the costs, risks, and
responsibilities of both the seller and buyer
that come under the purview of the 13
specific trade terms, e.g., FOB, CIF, etc.

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International Legal
Environment and Trade Issues
 International Legal Trade Issues
 Dumping
 Subsidies

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International Legal
Environment and Trade Issues
 International Trade Restrictions
 To protect domestic employment
 To protect consumers
 To protect infant industries
 To ensure national security
 To Retaliate

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Types of Tariffs and Non-Tariff
Barriers
 Specific tariffs
 Ad Valorem tariffs
 Licences
 Import quotas
 Voluntary Export Restraints (VER)
 Local Content Requirement

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Overview of International
Organisations
 GATT
 WTO
 The World Bank

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