Role of Director in a Company

For Business
Managers

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART 1............................................................................................................................................3
Role of director in a company................................................................................................3
PART 2............................................................................................................................................5
Dismissal and termination of employment contract...............................................................5
PART 3............................................................................................................................................8
Different dispute resolution mechanism.................................................................................8
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business is referred to as the set of activities which is undertaken for the sole purpose of
earning profit and generating maximum revenue. Businesses contribute in uplifting the economy
where it fulfil the demand of the general public and generate revenue from it and pay tax to the
government. Business law is a body of law that govern the working of the commerce and
business. It is a branch of civil law which deals with the issue of both private and public law. It is
a vast field which covers different areas of law like contract law, employment law, companies
act, data protection Act, intellectual property law and many other (Buckle and Thompson, 2020).
Companies are the part of business where its owners are entrusted with the role to ensure its
lawful and smooth running. The companies law is the lengthiest legislation which have over
1300 sections and deals every aspect of working of the company. This report is split into 3 parts
of which Part 1 shall deal with role of director in company, Part 2 will cover employment
contract and dismissal of employee and Part 3 will deal with different forms of dispute
resolution.
PART 1
Role of director in a company.
Case scenario
Gemme is a sole director of her company Clean Machine Limited. It supplies protective
equipment to the small businesses in the country of Bedfordshire. She does not understand the
roles of director in order to run the business smoothly and lawfully.
Legislative provisions relating to role of director
Companies are the separate legal entity distinct from its owners. It is an artificial
personality which have its own common seal. There are directors who are the owners,
responsible for the lawful working of the companies (Blair and Hitchens, 2018). There are
different types of companies that includes firstly the public company whose ownership is shared
by the general public who are called the shareholders. It raises the share capital by inviting
applications from general public. Another type of company is private company who is held under
the private ownership. It does not trade on the public exchange. Its director is the owner of the
company. Another type of company is based on liability where the limited liability companies

ensures limited liability of the owners to the extent of their capital contribution and the unlimited
liability company ensures unlimited liability of the owners.
The companies law of the United Kingdom regulates the corporations which are formed
and established by the Companies Act of 2006. the law is broken into two fields of which first is
corporate governance which provides the duties and rights of the shareholders, directors,
creditors and employees and the board of directors have the power to manage the running of the
business. Another field is corporate finance which states the options to raise the finance of which
first is equity finance where funds are raised by issuing shares and second is debt finance which
involves getting loans (Gatti and et. al., 2019).
Directors are the central authority who are appointed to the board in the companies
formed under Companies Act of 2006. In a limited company, directors are the officers who are
appointed by the shareholders to manage and run the day to day operations of the business. As a
company does not exist physically, it acts through its agents who are called the directors.
The companies law of 2006 states many duties or role of the directors to which they are
obliged to follow which are discussed under Section 171- 177 of the Companies Act, 2006. these
are discussed below- To act within powers- The director has the role to comply with the company's
constitution and act in line with the purpose of the company for which they have the
power entrusted in them. To promote success of the company- The director has the role to act in the best interest
of company. It must act in good faith so that it can promote the success of company for
the benefit of the members. This role prevent the director from putting the interest of one
shareholder over the other and exploit the asset of the company for the individual benefit. To exercise independent judgement- A director is not a one man band. He may hire
professionals and experts for the advice in the areas where it lacks. But the main role of
director is to exercise its own judgement in a decision making and does not act on the
instruction of other and enter in any arrangement or agreement which my compel him to
act on someone else's instruction (Renssen, 2017). To exercise reasonable skill, care and diligence- The main role of director is to act in
due diligence and if it does not act in due care, he may be liable under the tort of