Lots of issues. If the Chair was responding to local complaints/concerns regarding the activities of the business AND this had been discussed previously by the Council, they could legitimately start investigations, although this would normally be the role of the Clerk. If the member of the public was raising an official complaint, this should not have been addressed there and then and should have followed the Council's complaints procedure. If the Chair was taking action as a resident, rather than as Chair of the Council, it is not a matter for the Council, but this may depend upon the "undue influence" aspect of the complaint, i.e. the process by which the Chair instigated investigations by others.
Elected representatives must abide by a code of conduct that follows the Nolan Principles. Your district or borough council will publish its code of conduct on its website, and parish councils are expected to adopt this (the norm) or develop their own (rarely). It will include a paragraph about respect for others. The procedure for submitting a complaint will also be on the website.
The next election will be four years after the last one. It varies from area to area, so I can't tell you when.