What are some of the major laws that affect the operation of business organizations?

Question

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Answer 1

Business organizations are subject to laws that regulate securities, employment, trusts and finance.

The federal Securities and Exchange Commission regulates the sale of securities to the public. The Securities Act of 1933 requires certain information be contained in an initial public offering statement when a corporation intends to sell securities to the public. The Securities Act of 1934 established the SEC, and required registration of securities traded on a national exchange. It also requires additional disclosures upon registration, annual reports, quarterly reports and reports of significant developments. Other rules govern proxy requirements, and require a turnover of profits by insiders who buy and sell shares within a six month period (known as short-swing trading). Rule 10b-5 prohibits fraud in a wide range of securities transactions, including insider trading, sale or acquisition of securities by one with access to information not publicly known. Blue sky laws are state statutes that regulate the sale of securities. Under the National Securities Markets Improvement Act of 1996 corporations that are traded on a national exchange, exempt or sold only to qualified purchasers are no longer subject to state securities laws.

The Sarbanes-Oxley Act of 2002 (SOX) attempts to promote greater oversight by corporate directors of corporate activities and requires the registration of auditors of public companies and imposes regulations regarding the independence of auditors and members of the board’s auditing committee. The act also requires CEOs and CFOs to personally certify financial information regarding their corporations.SOX applies to publicly traded corporations. Additional provisions regulate other accounting and corporate governance aspects of publicly traded corporations.

Federal anti-trust laws such as the Sherman Anti-Trust Act of 1890, the Clayton Act of 1914 and the Robinson-Patman Act of 1936 encourage competition and to control monopolies and the status of trade.. The federal legislation prohibits monopolization, price fixing and price discrimination. The acts control is mergers and acquisitions which would be monopolistic in nature through the lessening of competition substantially.

In the area of employment, federal law imposes controls on unions and against discrimination. The National Labor Relations Board prohibits unfair labor practices and monitors fairness during union elections. The Fair Labor Standards Act regulates minimum wage, overtime compensation and child labor. The Occupational Safety and Health Act works to ensure safe work conditions. Title VII of the Civil Rights Act of 1964 prohibits discrimination employment based on race, color, sex, national origin, or religion. Complaints are filed with the Equal Employment Opportunity Commission. The Equal Pay Act requires equal pay for equal work regardless of gender. The Age Discrimination in Employment Act protects workers over the age of 40 from employment discrimination. The Americans with Disabilities Act prohibits an employer from disqualifying a worker if with reasonable accommodation he can perform the essential functions of the job.