Roles and Responsibilities of a Director in Business Law

For Business
Managers

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART 1............................................................................................................................................3
Case scenario...............................................................................................................................3
Legislative provisions.................................................................................................................3
PART 2............................................................................................................................................5
Case scenario...............................................................................................................................5
Employment contract..................................................................................................................5
Process of dismissal of employment contract.............................................................................6
Whether or not can Gemma terminate the employment contract with Charanjit?......................7
PART 3 ...........................................................................................................................................8
Case Scenario..............................................................................................................................8
Alternative Dispute Resolution...................................................................................................8
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business law is that branch of law which covers all the laws that relates to business
activities and its functioning. Business plays a very important role in the upliftment of the
economy of a country. It helps a country to generate revenue and profit which is directly affects a
country's economy. For all the business to run effectively, rules and regulations are important to
be made. Business law provides with rights, duties & obligations to all the employees of an
organisation and people connected to it. There are many laws which comes under the ambit of
business laws, which are: contract law, company law, employment law, insurance laws, laws
relating to alternative methods to resolve disputes, negotiable instruments, etc. These all laws are
related to business and its activities either directly or indirectly (Wilbanks, Hermanson and
Sharma, 2017). All these laws helps a company to set business and manage it. This report is
divided in three parts of which first one explains about the roles of a director of the company and
legislative provisions which govern the roles. The second part explains about the employment
contract and the process of its termination. The third part focus on the alternative methods in
which a dispute can be resolved.
PART 1
Case scenario
Gemma is a sole director of a company named Clean Machine Limited which deals with
the supplies of protective equipments to small businesses within the country of Bedfordshire. Its
a new company which is opened by Gemma and therefore she is unaware of the roles and
responsibilities of her as a director of the company and wants know the same. She also wants to
know of all the legislative provisions that governs the role of director.
Legislative provisions
A company is considered a s legal entity which is either formed by an individual or a
group of individuals that operates business enterprises. A company is organised generally to earn
profit from the business and its activities. All the companies in UK are governed by The
Companies Act, 2006.
There are two types of company i.e. private an public company. Public companies are
those whose capital is raised by issuing shares which can be bought by the public and private
companies are those in which there is no involvement of public in raising capital of the company

(Board and Role, 2017). Apart from this the companies are also divided according to the
liabilities of the members namely limited companies or unlimited companies. In a limited
company the liabilities of directors are limited to their investment in share capital while in
unlimited companies, liabilities of the directors are unlimited.
Gemma is a sole director of her newly formed company Clean Machine Limited. For this
she is expected to play all the necessary and important role of director in the company. This will
help her to now her duties towards her company and obligations to which she is bound with. As a
director of the company a person is responsible for all the management of the business activities
and exercise of its control over the company. The role of director is very different from that of a
company's employees or shareholders. Directors have specific duties and responsibilities with
respect to the company so as to achieve success and growth of an organisation. Therefore it is
important for a director to know them and understand the commitment made towards company to
help it grow. The companies act of 2006 in UK provides wide range of responsibilities of a
director towards the company and also gives duties to which they are bound with.
Under sections 171-177 of the companies act, 2006, there are 7 general duties given of a
companies director. These rules are based on some common rules of law and few equitable
principles. The seven important statutory duties of a director of a company are:
 The director of a company shall act in accordance with the powers given to them by the
law (Vafeas and Vlittis, 2018). The powers of the directors of any business is mentioned
in the article of association (AOA) of the company. These powers vary business to
business and depends on the structure and function of the company.
 The director of the company shall always act in good faith and for the success of the
company. The actions of the director must always be with a focus to gain profit, success
of the company and benefit of the employees working for the organisation. The decisions
of the director must always consider the impact of it on various different factors
associated with the company. It should always be for the company's long term success.
 The director must make the decisions and judgement which are for the benefit of the
company as a whole. The decision must not be influenced or on the basis of the demands
of the shareholders. The judgement or decision must be taken while considering the
future growth of the company.