Well, you have a point (Incognito). Major official factions (such as the LN or 101st) do still have the right to create and enforce laws within their ZoI, as long as those laws are reasonably fitting within the RP. Such as the trade embargo between Liberty and Rhineland, or the Liberty ban on non-Liberty capital ships and non-registered mercenaries. They can enforce these laws. They just can't prevent other members of their NPC faction from doing anything he's otherwise allowed to do, such as buying a capship or stopping smugglers. The LN/LSF/LPI could make a deal to allow a single faction the right to trade cardamine in Liberty space (unlikely, but it's an example). They could allow that faction to pass by without problems, and could destroy any BHG or mercs or whatever who fail to comply and continue hunting those 'smugglers' (who knows why they would, without a bounty), but they couldn't stop independent LN/LSF/LPI characters from stopping them.
As for minor factions with no real ZoI that they control... Well, they do have pretty limited power, and the value of spending that 500mil to become official is debatable.
