I have received 4 complaints from members about a volunteer co-director, I have had a meeting about this and she denies allegations against her, and is now making the working relationship very difficult. As the Owner and Executive Director I am trying to establish my rights over her, can I ask her to leave? If she won't leave what are my options, do I dissolve the organisation? if so can I restart on my own? Hoping someone can advise, thanks
Interesting question; director’s conflict is one of the main reasons CIC's fail and with a little forethought at the outset could easily be avoided.
Removing a director
Removing a director from their employment and office can be a complicated process with many legal issues to consider. Certainly for larger companies this may involve breach of contract, employment rights, compensation packages etc.
It appears that your co-director is acting in a voluntary capacity which may make the process less complicated. It also appears from a separate posting that you have asked her to resign and she has refused.
Most founding directors are concerned about losing control and opt for a single co-director rather than a larger board of say three directors or more. This can however bring its own set of problems should the relationship break down. Your constitution confirms that a quorum is two and most decisions require a majority vote.
Clause 23 of your articles of association outlines a number of ways in which a director’s appointment may be terminated, none of which apply to your circumstances.
As the Owner, Executive Director and the person with significant control you should have the power to appoint or remove the majority of directors and you may wish to clarify this with Companies House and, if so, exercise this by terminating your co-directors appointment by filing a TM01 with Companies House. This approach may however be open to challenge at a later date, so you may wish to get independent legal advice on this.
Another option to consider is to appoint a third director:
*You may or may not hold the formal title of chair but I would assume that as the Owner, Executive Director and person with significant control (out of two directors) that you are the de facto chair.
Once you have the third person appointed you can remove the director from office by an ordinary resolution provided that the strict procedure under s168 and s169 of the Companies Act is followed.
Special notice must be given to the director concerned and the other director at least 28 days before the general meeting at which they will vote on the ordinary resolution. The director will be entitled to be heard at the general meeting where the resolution to remove her is proposed. The director is also entitled to make representations to the board:
Closing down the CIC
You mention the possibility of closing down the CIC, you can do but this again requires a majority decision of the directors. The attached link refers:
Ways to avoid this in future
There are of course other options open to you but this is my personal perspective. Hope this helps and good luck.