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Samenvatting European Business Law
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Summary of 28 pages for the course European Business Law at VU
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Summary European Business Law 2.4Introduction
Regulatory environment = what traditionally in business tekst books is called the
political legal or legal environment. Is considered to encompass legislation (hard law)
and all other rules to which companies can voluntarily subject themselves (soft law
and self-regulation). It is examined from a business and a legal perspective
Book
Section 1: regulatory environment
Introduces the main legal and business concepts, the functions of law for business and
a structured approach to analysing the legal or regulatory environment
Section 2: functions for business by examining the most relevant branches of law
Economies of industrialised countries have developed intoe conomies in which more
domestic products is composed of services. The relative importance of traditional
property law decreased and of intellectual property law increased. Section 2 should
result in increased awareness of specific opportunities and threats of regulatory
environment for business.
Section 3: cooperation between regulatory services providers and business managers
Chapter 1: The regulatory environment
1.1 Legal and business concepts
Law = system of rules of conduct established by the legislature of a sovereign country
to correct wrongs, maintain stability of political and social authority, and deliver justice
Legislature = the state body, an institution, or combination of bodies with the power
to propose, pass, amend, and abolish laws.
Legislation / statutory law = law created by a legislature
Types of regulation:
Economic: to improve efficiency of markets
Example: price restrictions, competition
Social: to protect well-being and rights
Example: employee, consumer protection
Administrative: to regulate government
Example: taxes, trade marks
Corporate Social Responsibility (CSR) = responsible behaviour in all of a
company’s activities specifically with respect to economic, social and governance
issues
Corporate Governance (CG) = about the rules and practices by which a board of
directors ensures accountability, fairness, and transparency in a company’s
relationship with its stakeholders
Two types of external environments:
Macro environment: subdivided into demographic, socio-cultural, economic,
technological, legal and natural environments
Micro environment: external stakeholders like shareholders, suppliers,
customers, and distributors
Internal environment = a company’s functions, including the legal and compliance
functions which are usually concentrated in a legal department, and known for short
as ‘legal’.
,Regulatory environment
Hard law: rules from legislators, acts, and courts (case law or jurisprudence),
and co-regulation (cooperation between business and administration)
Soft law: non-state law; a legislator or reputable international organisation can
formulate rules or recommendations which are not binding but because of their
origin considered equally important as hard law
Self-regulation: industries and individual companies formulate their own rules
Total of rules plus the institutions involved in creating, applying and enforcing the
rules: regulatory system or legal order
Regulatory environment is specifically influenced by changes in the social-cultral and
political environment. Major regulation trend: increasing expectations of stakeholders
for businesses to be compliant, provide transparency, implement sustainability and
CSR principles, and respect human rights.
1.2 Functions
It is a management challenge to involve the legal function of a company more in the
business
Planning phase Business Function Legal concepts
concepts regulatory
Analysis Situational Strategic input Sources of rules
analysis
Choice Strategies Testing and Rights, liabilities,
improving prosecution
Implementation Control Risk and Compliance and
reputation contracts
Regulatory or legal audit = specific internal analysis which assesses the extent to
which the company’s legal function effectively and efficiently supports the business
Lobbying = professional practice of advocating private and public interests versus
legislators and decision makers. Involves public affairs and government relations
management
Legal feasibility testing = assesses a proposed course of action from a legal
perspective and identifies potential risks
1.3 Legal families
Comparative law = studies the similarities and differences among countries’ legal
systems
Legal family / legal tradition = a group of legal system that are related usually by a
common historical basis
Three legal traditions:
Anglo-American common law: legal tradition derived from the historical
customes and usage of a society, and the decisions by courts interpreting those
customs and usages. Basis for most private law systems in England, USA and
Canada. In international business common law is the most widely used legal
tradition
Continental-European civil law: tradition which has its origin in Roman law.
Basis for most legal systems in Europe, South-America, Africa and Asia. Creates
rules which are documented, codified, in books, codes, in a specific structure.
The rules provide general principles that must be interpreted and applied by
courts on a specific case situation
, Religious law: legal systems which are based on religious rules such as the
Islamic, Hindu and Jewish religions. E.g.: Hindu law, Islamic law (Sharia), Jewish
laws (Halakha)
Mixed legal system / multi-jurisdictional country = when within one country
different legal traditions co-exist
Hybrid legal system = mix of civil and common law
Positive law = total body of effective law in a jurisdiction
Civil law divided into:
Private law: regulates the relationships between individuals
o Private international law (law of conflicts): national legal rules regulating
among other which domestic legal order is applicable to international
relationships including international contracts
Law of obligations
Law of property
Law of persons
Competition law
Intellectual property law
Public law: regulates the use of powers by which an administration and other
public authorities affect people and companies
o Public international law (law of the nations): regulates for example how
States can interact by concluding Treaties
Administrative law
State law
Criminal law
Transnational law = to unite all rules which regulate actions or events that
transcend national frontiers. Encompasses public and private international law as well
as soft law and self-regulation
Substantive law = makes rights available and imposes duties on legal subjects
Procedural law = defines the institutions, formalities and processes for resolving
disputes
Business law = umbrella term for all rules of positive law, soft-law and self-regulation
Company or corporate law = defines the legal forms available to run a business in
an regulates the relationships between company, management, and its shareholders
1.4 Analyses
Situations in which information about the regulatory environment is needed as
strategic input:
To select new markets
To decide on market entry strategy for a new country
To develop plans for the markets on which the company already operates
Regulatory environment analysis (REA) Model:
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