In fact, during a certain period of time, there was a rough separation between corporate and securities laws in the USA. There is an obvious distinction between these two laws. According to the securities law, a public company must make disclosures to investors. The corporate law aims to regulate the internal affairs of the corporation through certain norms. To help you have a clear idea of these two laws, we will discuss each one separately.
What is a corporation? A corporation refers to a legal entity, which is created under the laws of the state. The main goal of corporations is conducting business activities. In a legal context, any corporation refers to a person that can sue and be sued. It is worth to point out that from the legal point of view, the corporation is separate from its stakeholders. The process of creating, organizing as well as desolating a corporation is done according to the state laws. These laws are different from state to state. For instance, there are certain states that demand a corporation to have a meeting with its shareholders per year. Others require a lawyer to be present at these meetings. The main goal is to make sure that the corporation is acting according to the state corporate law and regulations. Any corporation pays taxes and it should also comply with all the laws that usually a business faces.
To begin with, let’s define this term. From a legal point of view, securities are negotiable financial tools. Stocks, bonds, and mutual funds are different forms of securities. In fact, federal laws and state statutes regulate securities and all the activities connected with these financial instruments. Any company or an individual that deals with securities should act according to the laws and regulations of the state. Otherwise, it will lead to serious legal problems and headaches. It is true that a company issuing securities must follow strict rules and has to file a lot of documents with the Securities and Exchange Commission (concerning the value of their securities). Moreover, these companies must have Generally Accepted Accounting Principles on the basis of their activities. The federal law of the USA controls the securities field. It comprises the following acts: The Securities Act of 1993 and The Securities Exchange Act of 1934.
Thus, you should be better informed about the difference between the securities law and the corporate law. This knowledge is essential for conducting your business activities or investing your financial means in securities in a proper way.