Scaling Small and Medium Enterprises with Legal Principles

Scaling small and medium enterprises (SMEs) can be a challenging process. Everything from choosing the right market to developing a solid financial plan requires in-depth analysis, commitment and often an injection of funds. To make matters worse, internationalization in particular often proves to be a veritable minefield. But what if we told you that it doesn’t have to be?

Maxims of law are principles that are set to be followed by the legal system. Some of them have been such since the Roman Empire and some are more recent. Some would argue that following the same principles and rules as before is counterproductive and unreal. The reality, however, is that maxims of law encourage proper development of a state and as such constitute the corner stone of any modern and prosperous country. When looking at the success of a country and its companies, then, the closer one looks at the principles outlined in the maxims of law pdf, the more benefits are evident.

Companies that have decided to scale up can reap the benefits of the maxims of law as soon as they start planning their growth. Ironically, there is no maxim of law that states that you should utilize maxims of law at all, which shows how effective they can be. From offering guidance on how to deliver security to your shareholders to providing a clear line of communication with those who work for you, the principles outlined in the maxims of law pdf can guide any company through its growing pains. They can help you budget better, develop more meaningful relationships and comply with legal requirements in other countries. They are, in essence, perfect solutions for SMEs who want to conquer new international markets.

Internationalization can be particularly difficult for small and medium-sized companies as it usually entails moving people, goods and resources across borders. One of the key reasons why this is such a tricky business is the different regulations each country follows. This is where understanding maxims of law and developing a business model around them can prove crucial. They will help you better understand complex bankruptcy laws, recognize the significance of a well-constructed business plan and even negotiate trade deals with foreign clients. If followed to the letter, the maxims of law can reduce the risk of human error while also encouraging you to take responsibility for your decisions. If you’re new to these concepts, however, it can be difficult to know how to best implement the principles within your business model. To make matters even more confusing, the maxims of law pdf do not cover all the legal areas SMEs will ever come across – ie. marketing, investment, international tax regulations and more. As an example, an SME in the construction sector is not going to build their entire business model around the correct construction of a mortgage deed, despite the fact that it is vital to maintaining a strong internal structure. Other companies, for instance those in agriculture, will care much more about the regulation of crop protection products.

If your SME is going to scale up and expand internationally, there are certain things that must happen. You need to understand each geographical territory’s legal requirements, there needs to be secure transport services in place, and planning is necessary to ensure that your internationalisation goes smoothly. A successful business venture means paying close attention to potential legal requirements – some of which may jump out at you (like a careful management of contracts); while others may go unnoticed unless you’ve had proper legal mentorship. One of these invisible risks that may bite you after several years of slow internationalisation and brand building is a contract governing asset ownership.

If a couple gets married, often (and this is dependent on the country), they will sign an antenuptial contract which governs their communal ownership of assets as well as what happens to assets when they get divorced. In the context of business ventures and ownership, antenuptial contracts can have a serious impact on a company’s future. Owner-managers need to understand the implications of their choice of contract.

For South African SMEs, an antenuptial contract – unless expressly stated otherwise – only applies for the duration of your new marriage. This means that if you own a 60% stake in an overseas business, but are married in the community of property to a South African spouse (where assets are jointly owned), that asset belongs to both parties. If the marriage is dissolved or one partner dies then the spouse may have a claim on 50% of the business asset, leaving the owner with only 30% to their name. This leaves room for serious strife unless both partners have signed a legal agreement. Equally vital is understanding how antenuptial contracts correlate with South Africa’s Companies Act – even if you and your spouse move overseas and sign an overseas legal document. If you take South African assets overseas and you’re married to someone in the community of property, these assets are still subject to local law.

For example, if you’re a South African who has relocated to Australia, you would sign a local contract stating that all assets acquired during your marriage are separate. Hence, they do not belong to either of you. However, an antenuptial contract could state that the assets belong to both of you equally. South African law remains in place which means that joint ownership cannot be disbanded unless a divorce takes place. It is the mandates by marriage that stay in place, regardless of a change in domicile.

Antenuptial contracts, and the serious consequences that stem from each type of contract, are just one of many legal hurdles that explore the multi-faceted negotiation of bi-national partnerships. Companies that are serious about scaling up globally cannot afford to ignore the local laws where they operate and where they plan to expand to. Not doing so means that they risk having their assets seized if legal conditions aren’t met or, in the case of antenuptial contracts, meeting the financial requirements of two legal document sets in two different countries.