CIC Association

Serving Community Enterprise

Please help. Advice required where one director wants the company dissolved and other doesn't.

Dear all,

I have been referred to the CIC Association by the CIC Regulator. I am one of two directors of a CIC limited by guarantee. We have just started a contract, have completed two courses and have another ten to fulfil. We have students booked on two of these ten and a group wanting to meet to arrange booking their clients on a further two.

The working relationship has broken down between myself and the other director, since I have tried to raise with her that I am unhappy with the lack of commitment to the business on her behalf. She is working part time, while I am full time with the company. I have offered to resign immediately so she takes it forward, I have offered to resign following the completion of the contract, and then she can take it forward. I have offered to accept her resignation and take the company forward myself. She is refusing all of these options and is demanding the company immediately cease trading. This means the contract will not be fulfilled, clients let down and we will also be rendering the company insolvent as while it is currently solvent and has the means to be receiving more funding from the contract, it does not, in its current state, have the funds to pay back the initial funding that was provided to it as these have been used to purchase supplies (we teach craft and business skills to vulnerable and disadvantaged groups to promote confidence, self esteem and independence).

She has informed me on numerous occasions that she will take the matter further if I do not agree to the company immediately ceasing trading and being dissolved. And, she is receiving legal advice in this respect. She has accused me of embezzling company funds, mismanagement of the company and salary disparity. However, I have been completely transparent and have no concerns in this matter. With regards wages, we agreed to be paid for the hours worked and as I have been full time, my wages are higher then hers but we have timesheets that support this.

On Saturday she sent an email to the contract manager of the contract we are fulfilling, advising her that it had been proposed the company be dissolved and cease trading immediately. I have sent another email stating that I have no intention of agreeing to the company ceasing trading until the contract has been fulfilled to try to limit the damage but have been advised not to speak to the contract manager personally as I will be in breach of the complete transparency the other director and I have agreed to while we are in mediation.

Has anyone been in a similar situation and can you provide advice please? Alternatively, do you know of where I can go for advice? If I can avoid involving solicitors, I would prefer to as I have only been receiving a low income due to the company being young.

I really hope someone can help as I desperately need it.


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Hi Fiona, Your situation is not unique but it is extremely stressfull and you have my sympathy.

You could ask for advice from the Federation of Small Businessnesses. You may also have legal cover on your property insurance which covers employment and contract disputes. You may also have the cover in your car insurance too. From the home insurance perpsective, I think your situation may qualify for the free legal advice on offer because, as a director of a Ltd Co., you are an employee in dispute. Contacting the lawyers available through this does not commit you into a legal process but it should provide the facts on who is reponsible for what, the obligations on all parties, and potential ways around the problem.

I do hope you can resolve your problem quickly and as painlessly as possible. I do understand from first hand how frustrating the injustice that has been dumped on you is. When one party is being "carried" in the way you mention, it is a partnership doomed from the outset. Hopefully though, you can nip it in the bud and get things back on track on your terms as the party with a true work-ethic.


Kind regards.


David Anderson

Thank you very much David. I have been so busy trying to fend off allegations and limit damage to the company that I hadn't considered what legal cover I may have. I will certainly be looking at that!




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