Compliance with Business Regulations and Dispute Resolution

The provided report discusses the significance of adhering to various regulations for conducting business activities, including compliance with laws that can save companies from penalties and strict legal actions. The report also touches upon legislation being used to reach conclusions in disputes, enabling businesses to operate without hindrances. Furthermore, it highlights how market conditions in a country depend on applicable laws and legislation.

BUSINESS LAW

Table of Contents
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
TASK 2.................................................................................................................................................5
TASK 3 ................................................................................................................................................6
TASK 4.................................................................................................................................................7
CONCLUSION....................................................................................................................................8
REFERENCES.....................................................................................................................................8

INTRODUCTION
A law that governs the business transactions is called business law. The other names of
business law are mercantile law and commercial law. Business law provides the law for commercial
matters (Adachi, 2013). There are two different areas of business law; regulation of commercial
entities through their respective law such as partnership law, company law, bankruptcy law and the
second is law of contact for commercial transactions. This report covers the details of existing
business law system in UK. Further, it covers the problem Pegasus is going through. The details in
the report will provide ways to resolve the disputes.
TASK 1
Division of law: United Kingdom legal system is divided into three separate legal systems
viz. England and Wales, Scotland and Northern Ireland. When UK joined European Union, the EU
has implemented EU Legislation on the matters of EU. The ultimate power lies with the Queen of
UK. The law is implemented by the government. UK has a partially written constitution. To pass a
bill, the consent of two houses in parliament, House of Commons and the House of lords is
necessary. Constitutional Reform Act, 2005, divided the executive and judiciary powers. Lord
Chancellor to head was appointed to head the judiciary part and various judicial committees were
constituted for the appointing judges (Ayios, 2018).
Sources of law:
1. Primary Sources: These are the sources which has not been used before and are first hand
information which is required to be interpreted.
 Case Law: These are the best primary source as they includes facts, issues and judgement.
To understand a current situation, one may use the previous case law to understand the scope
and consequences of a particular situation. The case laws are to be used for future
references.
 Legislation: These contains the laws that governs the people and activities conducted in
UK. Parliament passes the laws to be enacted in UK. Nobody can challenge the Acts passed
by Parliament (Deakin, Johnston and Markesinis, 2012).
 European law: European law is applicable to the extent of matters covered by European
Union. The derivatives of EU law can be used as a primary source.
2. Secondary Sources: The information already used and interpreted previously.
 Legal Encyclopaedia: Halsbury's laws are the most popular and preferred law
encyclopaedia that is used in UK to have the knowledge about various laws (Dolzer and
Schreuer, 2012).
 Parliamentary Publications: The publications is about the law enactments made in the

past. These are found in parliamentary debates, report of various committees etc.
 Law commission: The law commission are constituted to oversee the legal system and
make necessary recommendations. The recommendations are final after the commission has
consulted it with public, experts and other parties (Folsom and et. al., 2012).
 Law Journals: The journal contains various arguments, newsletter and articles about the
legal issues that happened earlier.
 Textbooks: A textbook can be good source of information which has been interpreted by the
authors. Various interpretations give a clear view and meaning of the subject matter one is
looking for.
The highest authority is the Queen of UK. Since, there is no single written constitution, the
decisions of prime importance is taken by Queen and implemented by the government. The
government has a very less interference due to which the legal system could see flaws in the system
(Hamilton, 2015).
A bill is the draft law that will enacted if it receives the Royal assent. UK parliament has
specific procedure by following which a bill is converted into act. The process is as follows:
First reading: Initiation of legislative procedure where bill is presented.
Second reading: In this, a discussion on the purpose and major areas of it enactment.
Usually, it takes in the form of debate between two houses of Parliament.
Committee stage: It is given to an independent standing committee for examination.
Report stage: The bill is again sent for further examination of its purpose. It is presented in
a report form within two weeks so that appropriate amendments can be made.
Third reading: The final draft of bill is reviewed. No amendments are allowed to made at
this stage except the ones which have their third reading in the House of Lords.
Royal assent: After being approved by both the houses, royal assent by the Queen is given
which makes the bill into an Act.
Pegasus can go through the contents of the Act to know the extent of its applicability on
their business. The applicability can be known by going through the contents of the Act such as the
definition, nature of the transactions, the companies that are covered in the Act, date of applicability
etc. (Hayek, 2012).
TASK 2
In the benchmark case of Pimlico Plumbers v Gary, Pimlico Plumbers was a UK based
company where Gary Smith was a self-employed plumber for six years. Gary suffered a heart attack
and requested the company to reduce his working hours. The company refused to do so and
dismissed Gary. Gary filed a case on unfair dismissal against Pimlico Plumbers, he further provided

that he has been refused for sick pay and holiday pay and also faced discrimination by the employer
(Hamilton, 2015).
Pimlico Plumbers in their argument mentioned that Gary can not be considered an employee
as he was self-employed. The court rejected the Pimlico Plumber's statement, and considered Gary
an employee of the company. It lost the case to Supreme court.
Supreme Court stated that, Gary will be considered an employee because Gary had some
employment rights such as holiday pay, sick pay, working on contract basis. The company also put
administrative control over Gary as well as the amount he will be paid, putting restriction on the
working of Gary in the competitor's company if he leave the company. Moreover, it was mandatory
for Gary to wear uniform of Pimlico Plumbers (Macaulay, 2018).
In the case of Pegasus, the workers are entitled to a percentage of the delivery charge, prior
permission of Pegasus is required for substitution of drivers and the substitution from Pegasus
workforce only, drivers must wear the uniform of Pegasus, drive the Pegasus van and carry its
identity card. The contract executed between the workers and Pegasus has the words “gross
misconduct” and “wages”. According to the Judgement of Supreme Court, all the above-mentioned
criteria makes the worker of Pegasus its employees.
Employment law is the law governing the relationship of employer and employee. Pegasus
should read and understand the Employment law and various case laws judgements to have a
complete knowledge about Employment law. This will help Pegasus to resolve the disputes that
could arise in future. The previous case laws will make the company to analyse the disputes and
decide the matter accordingly (Hammond, 2012).
TASK 3
Private Companies: A company without the minimum share capital requirement, having
maximum of 50 number of shareholders, and which do not invite public for subscription of its
shares is called a private company. A private company can be limited by share or limited by
guarantee. In a private company the shareholders are its private members and not a single share is
held by public. The shares are offer to the members of the company. Transferability of shares is
restricted to the companies members and can not be transferred to any other outside the company. It
is governed by its memorandum and articles of association (Sjåfjell, 2014).
The process of formation of a private company are as follows:
1. A suitable name should be decided. The name should not resemble the name of any
previously registered company. In case of a private company, the name should end with wod
“limited”. The application shall be in the form of IN01 and filed with Companies House.

2. Preparation of Memorandum of association and article of association.
3. A company must have at least one shareholder who should be allotted minimum one share
of £0.01. However, there is no restriction on number of shareholder or denomination of
shares.
4. Minimum two directors are required to be appointed and there is no maximum limit on the
number of directors. Further, he must give his consent to act as director in the form IN01.
5. It is compulsory for a company in UK to have a registered office in England or Wales. The
address will be notified to Companies House, where notices will be served.
6. A register that will contain the details of share holding of each member should be
maintained.
7. A certification of incorporation shall be obtained to commence the business.
In the case of Salomon v. Salomon, Salomon converted the his boot making sole
proprietorship to a company, incorporated with members comprising of himself and his family. The
transfer was fixed by way of shares and debentures having a floating charge on the assets of the
company. After few years, the business failed and it went into liquidation. The unsecured creditors
failed to recover from liquidation proceedings.
Salomon was holding majority of shares and was made personally liable for the company's
liabilities. The issue was whether a shareholder could be held liable for its debt beyond the
contribution to the capital which would amount to unlimited personal liability.
The Court held that Salomon incorporated the company legally by registering under
Companies Act, 1962 and the agent of the business should be held for debt incurred during the
validity of agency. However, an appeal was filed which reversed the ruling passed earlier and with
the unanimous decision, it was concluded that company was duly incorporated and is indeed an
independent person having its own rights and liabilities. Hence, there was clear distinction between
company and its owners/controllers.
This was the benchmark case, which made it clear that a legal company duly incorporated
by registering itself under current Companies Act, will be called a limited company. Furthermore,
the shareholders have liability up to the extent of nominal value of share which is unpaid. Along
with this, a company can own properties in its own name and enter into contract. Moreover, it can
sue and be sued in its own name. In nutshell, it has an identity separate from its members.
Registered Company: A company in UK becomes a registered company when its name if
recorded officially in the register of Companies House. In the case of Pegasus, the company will
operate by establishing a branch or place of business in UK(Miller, 2012).
The steps in formation of registered company are:
1. The first step is to decide the structure or type of the company. A company type shall be

chosen by taking into account various factors.
2. After this, the name of the company will be selected. It must resemble the name of an
existing company which has been registered. A new limited company should get prior
approval of Companies House.
3. The information that are required to be furnished to Registrar are:
 The name that has been selected for the company.
 The address of the registered office in UK for the purpose of communication.
 The motive for which the company was formed.
 Details of share capital structure.
 Details about company's directors.
 Details about subscribers to the MOA.
Preparation of Memorandum and Articles of Association: The company shall prepare
MOA and AOA defining the objectives on the company and bye laws in the AOA. It can be filed
online (Hannigan, 2018.).
File the incorporation with Companies House: Form IN01 will be filed to the Companies
House. It should be filed with supporting documents and prescribed fees. Companies House takes 5
working days to process the form.
After various approvals, the name of the company will be recorded and the company shall
hold its first board meeting within the initial weeks of its incorporation (McAdams and et. al.,
2015). The company shall maintain various registers such as register of directors, directors'
residential addresses, secretaries, members, people with significant control, allotment of shares etc.
The shareholders will be give share certificates.
The company is managed by directors who have various roles which are as follows:
 Making decisions, formulation and implementation of policies.
 Conducting meetings such as annual general meeting, extra-ordinary general meeting etc.
 Preparing and filing of various statutory documents with Companies House.
 Maintaining and keeping records.
 Forming contracts with customers, lenders, supplies and other key people.
TASK 4
The issue that Pegasus facing was about the expensive and time consuming process of
litigation. The litigation process is a lengthy process that often leads to confusions. Therefore. It can
go for ADR in case of any disputes.
Alternate Dispute Resolution (ADR) is settlement of disputes without going to the
courtroom. This can be done by evaluation, negotiation, conciliation and arbitration. ADR is a easy

process and it takes less time to get to a conclusion. The most popular forms are arbitration and
mediation. Negotiation is done to resolve disputes (Tomasic, and Fu, 2018).
When a dispute is resolved in a informal way without going for litigation then it is called
mediation. Mediator is a party who negotiates, communicate with the parties to the dispute in order
to ascertain the facts clearly. He analyse the facts on the basis of case references and decide a
conclusion. Mediation is used to settle the disputes between investors and their stock brokers
(Marston, 2013).
Arbitration is a process of settling the disputes amicably. The court does not interfere. A
person with the consent of both the parties is appointed as arbitrator. Arbitrator hear both the parties,
gather facts, judge the facts and pass an order. The order passed by arbitrator is final. It is a speedy
process to resolve the disputes.
Arbitration could be a suitable method for Pegasus to resolve the disputes. It is cost-effective
and less time consuming (Wang, 2014.).
CONCLUSION
From the above report, it has been concluded that there are various regulations that entities
are expected to follow for carrying out its business activities. Compliance with the various
applicable laws can save the company from penalties following by strict legal actions by the
government. Such actions against the company damage the goodwill of the company. The
legislation can be used to get to a conclusion when there is a dispute. It helps them operating their
activities without any hindrance. The market conditions in a country depends upon the laws and
legislation that are applicable.

REFERENCES
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