[throwaway38375]

You have the same person causing two different problems.

1. With regards to the CTO, treat them like an employee. Prove that their performance as an employee is not good enough, and fire them. They now have no reason to interact with the company on a day to day basis.

2. As a 5% owner, treat them like a shareholder. Put together a reasonable offer to buy them out, and do so. If they don't want to sell then that's fine, you'll only have to interact with them during shareholders meetings.

The first action will solve a lot of your problems. The second action can happen later on when you've got the money to do so.

[fullshark]

Yes, this seems to be the way. Fire him, get him away from day to day operations asap. He's already off the board, so that should satisfy your investor right? Does he need to own 0% of the company to put anything more into it?

[nailer]

Honestly as a CTO: if you can fire the CTO without it being a disaster the CTO is a terrible CTO.