Law for Business Managers

Law for Business
Managers

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART 1............................................................................................................................................3
Role of sole director in a company.............................................................................................3
PART 2............................................................................................................................................5
Process of dismissal....................................................................................................................5
PART 3............................................................................................................................................7
Legal rules and Provisions..........................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business plays a major role in uplifting the economy as it contributes to the national
income and Gross Domestic Product (GDP) of the nation. There are different kinds of business
organisations which includes sole proprietorship, partnership, company and corporations. The
businesses have their advantages according to their structure. These businesses are govern by
their specific laws like companies are regulated by companies Act, partnerships are regulated by
Partnership Act and many other. The business law is a vast field and a branch of civil law which
includes several legislation like contract law, employment law, intellectual property law, data
protection law and many other (Khabti, 2019). Every business organisation is bound to comply
with these legislations so that it can prevent legal consequences. This report is split into 3 Parts
of which Part 1 will cover the role of sole director, Part 2 will deal with dismissal of employee
and Part 3 will cover different alternate dispute resolutions.
PART 1
Case scenario
Gemme have set up a new company which is namely Clean machine Limited which is
entrusted with the work of supplying the protective equipment to the small businesses which are
in Bedfordshire. She is the only sole director of the company and does not know about her role
as the sole director.
Role of sole director in a company
A company is a artificial personality which has its representative who manage the day to
day operations of the company. These representatives are the directors who are also the owner of
the company. The company is a separate legal entity distinct from its owners. It has its perpetual
succession which means that the owner may come and go but the company shall remain forever.
The process of incorporating a company and its winding up is a complex process and cannot be
dissolved by mere closure rather a complex formality is involved in order to dissolve it.
There are different types of companies which includes public company which involves
raising the share capital through inviting application from public and another type of company is
private company which involves a firm under the ownership of the private individual (Alfouzan,
2020). They may issue the stock and have shareholders but they cannot trade in the public
exchanges. On the basis of liability, there are two types of companies which includes limited

company where the liability of the owner is limited to the extent of their capital contribution and
another type of company is unlimited company where the liability of the owners of beyond their
capital contribution and can be may personally liable for their debts and liabilities.
The sole director of a company is the one who is the only director for the time being in
the company. It can also be said that it is a single member company. As a company cannot
physically act so it has its agents which act on behalf of the company. A director is a fiduciary of
a company and has many duties. The Companies Law of 2006 put forward may duties of the
director which are stated under Section 171- 177 of the law (Prescure, 2019). These include- Duty to act within the powers- This duty mainly obliges the director to act and comply
with the constitution of the company also obliges to act in line with a purpose foer which
they have been given power. Duty to promote success of company- The director is duty obliged to act in best interest
of the company. The director must act in good faith so that it can promote the success of
the company. So that it can work for the benefit of the members as the whole. This duty
is very extensive as it prevents the director from putting the interest of one shareholder
over the other. Duty to exercise an independent judgement- This duty does not make a director one man
band rather a director may rely and hire the expert or professionals where it lacks
expertise. But the director shall also exercise is own judgement in the process of decision
making. Duty to exercise reasonable diligence, care and skill- The director must work with
reasonable care and diligence so that it can prevent any negligence from happening. In
case, a director commits any act which is negligent, it may be liable under the tort of
negligence and also have to compensate for the losses caused due to negligent act. Duty to prevent conflict of interest- The director must work on to avoid direct and
indirect conflict of interest. And in case, one occurs, the director must work to avoid or
prevent it. If the director makes any profit in any situation which give rise to any conflict
of interest, the director may be accountable for such profit. Duty not to accept any benefit from third party- It covers all such benefits but the
liability shall arise when the benefit shall be accepted by the director which seems like
that the director wants to create a conflict of interest.