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Role of lawyers in Corporate Finance
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Role of lawyers in Corporate Finance
Role of lawyers in Corporate Finance

The role of Corporate Finance lawyers is to advise the companies on the aspects of buying and selling the business. They guide the procedure to comply with the company law, raising of funds, compliance with foreign laws, mergers and acquisition with public or private companies, etc. The Companies Act, 2013 have come up with more ideas related to finance the companies with the help of the qualified lawyers.

Role of Lawyers in Corporate is as follows:

The role of the finance lawyer in corporate is to ensure that the transactions done by corporate are legal. The corporates should be aware of their legal rights and duties. The finance lawyer should possess the knowledge of tax laws, contract law, intellectual property rights, securities law, banking law and any other laws related to the business corporations for which they work.

  • Corporate lawyers need to draft, review, amend or add any conditions or exceptions whenever required in the documents related to the corporation. They usually negotiate the deals between parties on behalf of the corporation as being impartial and with a lawful objective.
  • The corporate lawyer should act as a mediator in the meetings. They need to negotiate, understand the circumstances of parties and help to suggest and discuss the pros and cons of the deal.
  • A corporate lawyer must restrict and guide the company from investing in the case of shares, debentures and other securities. The companies, outside India, can be exempted from certain restriction, and the laws of a specific foreign country shall be applied.
  • He should frame the restriction on loan or guarantee given to the director or any other person. This provision from the Companies Act, 2013 was first applied to public companies, and now it is also extended to private companies.
  • Corporate lawyers should know the company and business laws. They must understand the aspects of the legal entities and assist the company in various transactions beneficial for the management and operation of the business.
  • They should conduct due diligence on the target company, assessing the existing liabilities. In mergers and acquisitions, corporate lawyers shall enter into negotiations with the entity, along with a memorandum of understanding. They need to correspond by filing notices in case of acquisition and merger. They also draft the finance-related agreements for the companies.
  • The lawyer should draft the shareholder agreement, for finalizing the transaction and advise the company regarding shares issued concerning the requirement.
  • They also draft the Memorandum of Incorporation for new entities and lodge it at the Companies and Intellectual protection Commission together with documents affecting the name changes of the target company.
  • The loans and borrowings shall be limited. The securities and guarantees on behalf of the company shall be restricted to 60% of the paid-up share capital, 100% of its reserves and premium or whichever is more. Such conditions can be overcome by passing a special resolution in a general meeting of the company. The lawyers should be aware of these facts and implement the same.
  • In the case of deposits, they can be accepted from its members and also from the other members, whereas in private companies, the deposits can be taken only from its members. All these facts related to the deposits of the company regarding registration, maintaining the details of separate bank account, loans should be known to a corporate lawyer.

They should be aware of all techniques to create finance and earn profits to commence the business. They should also suggest about the current loan systems, banking systems, etc.

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