The laws that govern businesses should be stringent but not complex.
Simplified rules to govern business are easier to administer than unduly complex laws and it is important that compliance and engagement with the formal economy should not impose substantial cost burdens on businesses.
Business structures and the laws setting them out should be limited in scope and easy to understand and explain.
It is a practical reality that in many countries the burden of regulation falling upon business has grown significantly over the past century. As a matter of practical expediency, policymakers may consider adopting a one-minus-two approach whereby for every new business law adopted, two unnecessary laws are removed, such as the UK “Red Tape Challenge” proposal.
Countries may want to consider adopting sunset clauses in their business laws, whereby a law automatically expires at a certain date, if not renewed. It is notable that in many cases socially undesirable business outcomes can be traced back to outdated and inappropriate business forms being used. Revision of the regulations can help to ensure that they remain up to date and appropriate for society’s current needs. Heed should be taken not just of the business laws themselves but also of the surrounding social and political environment, to ensure that interactions do not drive unnecessary or undesirable behaviours.
The simpler a law is, the harder it is to break undetected – whereas complex laws allow more opportunities to skirt round or defeat their object.