Read the text to fulfil the tasks. Every year there is an increase in the number of laws, lawyers, and legal cases in the courts

Every year there is an increase in the number of laws, lawyers, and legal cases in the courts. This increase is due to the economic growth in the world; more business means more transactions, more possibilities for conflict and confusion, and, consequently, more legal activity to regulate business. If you set up a business, even a very small one, you will be buying and selling products and services, and perhaps, employing people, buying or renting land, and borrowing money. In order to engage in all of these activities, you need to have some knowledge of basic legal principles. And you will need to know about any laws specifically relevant to your kind of business. If you do not run your business honestly you may also need a knowledge of criminal law!

Nearly every general area of the laws relevant to running a business, and nearly every country has its own set of laws designed specifically to regulate business.

If you want to set up a business under English law, the first question to consider is whether or not to form a limited company (or corporation). It may consist of a single person, or several persons, but in each case it has a legal identity separate from these individuals. The members of a limited company have limited liability.This means that if the business has difficulties, the members can be made to pay its debts only up to a certain limit.

Certain very large companies are registered as public limited companies (PLC). They raise capital by selling shares to the general public. A share is ownership of a proportion of the company, and thus the right to a proportion of any profit it makes (dividend). Another way for a company to raise capital is by issuing debentures, or bonds,in return for loans. Debenture holders are entitled to an annual payment of interest. In general, they have the right to sell their debentures back to the company (that is, call in their loan), or sell them on to someone else.

A limited liability company is not the only way to run a business. A single person may operate as a sole trader, and even if he employs many people, he alone is responsible for management and, thus, for any debts. Another way to run a business is for two or more people to form a partnership in which they share management, profits, and liability to debts.

If the advantage of forming a company is that it offers members some protection in case of bankruptcy, the disadvantage is that there are many regulations to observe in setting it up and running it. Under English law, there must be a minimum of two people, and they must sign a document called a memorandum of association.The memorandum contains the name of the company, its objects, whether it is limited by shares or guarantee, and the amount of share capital. There are some restrictions on the choice of name: for example, the registrar will not accept a name that is the same or very similar to a company already registered, since this could confuse consumers and clients.

The law also requires a limited company to keep accounting records at its registered office. These records must be open to inspection at any time by the company’s directors and secretary, and a copy must be sent to the registrar each year. Breaking these regulations may result in criminal prosecution.

Another possible cause of criminal prosecution is insider trading. This means using inside knowledge to gain private profit when buying and selling company shares. The crime was not even recognized in English law until 1967. The 1985 Company Securities (Insider Dealing) Act lays down a maximum penalty of two years imprisonment.

Setting up and running a company are not the only legal matters businessmen have to deal with. At some stage, most of them employ the services of lawyers for advice on how to minimize their tax liabilities and to make sure their business does not exceed noise or pollution regulations. Company directors, partners and sole traders have to consider the legal implications of making contracts to buy and supply goods and services.