Business Environment: Legal Environment -The Commerce subject detailed notes with practice tests are very useful for Assistant Professor / UGC NET / JRF and other competitive exams preparation.
The government, in every country, regulates the business according to its defined priorities. Legal system of a country is framed by the government. The laws which are passed by the government for business operation are called legal environment. In every country, the government regulates business activities. These regulations of government are considered as legal environment. In practice, legal and regulatory environments go hand in hand. The limits for business operations are decided by regulatory environment and this is also called legal environment.
Legal Environment
The reformist policies have led to a shift from direct physical controls to indirect regulations including fiscal and monetary measures, changes in direct and indirect tax laws, interest rate structure and money supply.
The different examples have been given. The government actually wants to set up regulatory bodies for all possible bodies that give ‘level playing field’ to every participant.
1. Foreign Exchange Regulatory Act (FERA, 1973) to be replaced with Foreign Exchange Management Act (FEMA, 1999) that was implemented in the year 2000. This act has been replaced in later pages.
2. Monopolistic Restrictive Trade Practices Act (MRTP, 1969) was replaced with Competition Act in 2003. The new act is reformative in the sense that it provides for a fair market friendly quasi -judicial body, Competition Commission of India. The new act is less prohibitive and punitive.
3. Insurance Regulatory and Development Authority was set up in the year 2000 for approval and grant of licenses to new insurance companies, and investment of their funds. The result has been the more customized products to customers.
The government over a period has gone for various such changes, quashing old acts and replacing them with new ones.
The few examples of various acts have been given below:
1. Basic Business Laws: Industrial Contract Act, 1872; Indian Sale of Goods Act, 1930; Partnership Act, 1932; Negotiable Instruments Act, 1940; and Arbitration Act, 1910.
2. Environment Protection Laws: Water (Prevention and Control of Pollution) Act, 1974; Air (Prevention and Control of Pollution) Act, 1981; and Environment Protection Act, 1986.
3. Corporate Laws: Companies Act, 1956/2013; Sick Industrial Companies (Special Provisions) Act (SICA), 1985; Industrial (Development and Regulation) Act, 1951; Monopolies and Restrictive Trade Practices Act, 1969; Competition Act, 2002; Consumer Protection Act, 1986; and Essential Commodities Act, 1955.
4. Securities Regulatory Laws: Securities Contract (Regulation) Act, 1956; and Securities Exchange Board of India (SEBI) Act, 1992.
5. Labour Laws: Factories Act, 1948; Payment of Wages Act, 1936; Payment of Bonus Act, 1965; Workmen’s Compensation Act. Payment of Gratuity Act, 1972; Employees Provident Fund and Miscellaneous Provisions Act, 1952; Trade Union Act, 1926; Industrial Disputes Act, 1947
6. Miscellaneous Regulatory Laws: Standards of Weights and Measures Act, 1956; Patents Act, 1970; Trade Marks Act, 1999; Foreign Exchange Management Act, 1999; Trade and Commercial Commodities Marketing Act, 1959; Agricultural Product (Grading and Marketing) ACI, 1959; and those relating to specific industries like pharmaceuticals, banking, insurance, electricity supply, carriage of goods, etc.
Business Environment: Role of Government in Business