Importance of basic legal knowledge to enterpreneurs and business people

     The tremendous economic growth, the growth opportunities, cross boarder business, the growth of service sector, the overall development and growing entrepreneurship, has prompted me to expose my views on the requirement of basic legal knowledge to entrepreneurs and business people. Apart from these general things, I had to think so deeply about two other things. One is about the perception of few people about lawyers, law and the legal system in India. Second thing is about the struggles faced by a top business man due to his lack of basic knowledge of law.  

     Apart from lawyers and that to lawyers with interest and devotion to profession, very few people like to discuss about law. There is a wrong perception about the lawyers, the law and legal profession in the minds of few other professionals. Even Chartered Accountants and Company Secretaries do have bad opinion about law, lawyers and the legal profession. It is true that many may not like to discuss about law and it applies to other professionals too. But, avoiding one or some profession without justification is not a good thing at all. The Chartered Accountant will ensure as to whether all the book entries are supported by vouchers or documentary proof, whether the company maintains all the books and registers as required under company law, whether the company complies with the Accounting Standards and finally as to whether the company has complied with certain provisions of Companies Act, 1956. The Company Secretary will assist the management, ensures proper filing of all returns, ensures the maintenance of all registers, assist the management in conducting the meetings, prepares minutes and undertakes such other secretarial things as mandated under law and the management. Despite the fact that the Chartered Accountants and Company Secretaries should concentrate on law and deal with the legal issues on regular basis, they may not like to discuss with lawyers and may have a bad opinion about legal profession. Why I am talking about Company Secretaries and Chartered Accountants is that a software professional may not like to discuss law and may not like to discuss legal issues with a lawyer without any need, but, these professionals like Chartered Accountants and Company Secretaries will be having no justification in having baseless notions about legal profession. With great respect to Chartered Accountants and Company Secretaries, I had to refer about the attitude of some professionals. This is one issue which prompted me to expose my view on the requirement of having basic legal knowledge.

     Second thing is about the struggles faced by top businessmen due to his lack of basic understanding of law. I had the privilege of looking into a big takeover dispute between two big software companies in India. The Managing Director of one Company used to personally follow-up the matter in view of the stakes involved and the possible market reaction. The Managing Director whom I am referring to holds substantial shares in the company either directly or indirectly. It was a very simple case. Had he tried to know about the SEBI and its authority, he could have felt very free in dealing with the issue. The Managing Director had to pay lakhs of rupees as fee and ultimately the case was decided in a few minutes in court saying that the High Court will hesitate to interfere with the matter as the SEBI has the entire jurisdiction over the issue. I felt very had about that Managing Director who do not possess even the basic legal knowledge.

     Gone are the days where one needs good support, political support, money power etc. to start their own company. But, today, without any support and much finance, one can very easily start their own company and can become big like Bill Gates of Microsoft, Steve Jobs of Apple Computers and Narayana Murthy of Infosys.

     A professional who is working in a software company today may start his own Company after a month and make it so big. Its all happening now in India. But, one thing is sure that a person can not be a successful entrepreneur without having the basic legal knowledge. An employee who is working in Government Sector need not have basic legal knowledge as the Trade Union will take care of his dispute if any.

     Getting quality legal service is a costly affair and it needs lot of follow-up too.  Again, if a person lacks the basic legal knowledge, he may have to sacrifice his interests and may sustain huge loss in the course. As such, today's professionals and educated should possess the basic legal knowledge as they may not know as to when they get an idea or opportunity to start their own organization. The opportunities to grow are more today than before and its true as everyone knows.

     As such, an entrepreneur should know the basic legal things like what is law, what is court, what is company law, what are the features of company, what is tax, how is tax computed, the legal procedure, the practice etc. as otherwise it is extremely difficult to run an organization. So, irrespective of one's core subject, now, it has become indispensable to everyone to possess the basic legal knowledge. The young entrepreneurs may not venture consulting an expert lawyer for each and every simple thing though he may require expert advice at times. If one lacks the understanding of basic legal things, an entrepreneur may resort to filing a civil suit for recovery of a debt of even 20,000/- without considering the options for amicable settlement. He may not be aware of the legal world and the practice.  I am just giving an example, but, the issue and the difficulties in the course are very wide.

     Some may not agree with my view, but, I am sure that every entrepreneur and business person should have basic legal knowledge as otherwise he may have to pay the price for not having basic knowledge.

Note:

  1.  My intention is not to offend the feelings of any professional or profession.

  2.  My view is based on my own experience.

  3.  If any one contradicts with my view or if there is a need to enlighten me with some new things, they are and those are welcome.