Social Enterprise - Director wants to resign

tbumps

Hi

I set up a small social enterprise with a friend a year ago. We each own 50% of the shares & have each invested the same amount as a Director's Loan into the company (registered as a CIC). We have recently planned several events & committed funding for room hire tec. but she recently decided that she wants to stop her work on the social enterprise & start a new unrelated business. Our articles state that we must have at least 2 Directors.

So am I right in thinking that she can only resign if we find another Director first? What will happen to her shares - could I offer to buy them at the original price? and what about her Director's Loan? We couldn't repay that until we make a profit which we're some way off doing anyway. Would a new Director be expected to pay it off or would it just sit in the company as a liability until we can pay it?

What happens if she just refuses to do any more work - not officially resigning but basically stopping her unpaid work? I guess I'd either have to do all of her work or wind up the company?

TB

Savvy_Sue

Did you take any legal advice before you set up in this way? I'm guessing not, but you may need some now.

tbumps

Yes, plenty of advice before we set up & our articles are fairly standard for social enterprises. The plan had been to invite more non-Exec Directors onto our board so that we would have more directors full-stop but my partner was keen to delay this until we were trading & had more to discuss with a bigger Board of Directors!

artichoke

hi

why not contact your local Social Enterprise Board for advice?

I use SEEM social enterprise east midlands....

You say you have not started trading yet but have committed money towards future events...

i suppose your options are:

you wind up the CIC and loose the committed money,

you find another director who could put up this money

you put up the money yourself and find another director who does not contribute money,

you cancel the events (swallowing the losses) and then try and find another directors and funding..

Have you being paying yourself and the other director a wage? or are you working for free until the CIC can afford to pay you?

I am wondering if the other director just has lost faith that the CIC will ever be trading a surplus and needs to set up a different business to bring in a quicker income??

Is there any way you can talk to her and see if she will change her mind - maybe reduce the hours she is working for the CIC and then she can do both?

Is the CIC something you will find it easy to recruit another director / investor into?

art