Vernon Sankey has caved in to pressure from activist shareholders and resigned as chairman of the photo booth and mini-lab operator Photo-Me International.
A statement said Mr Sankey felt it was not in "the best interests of shareholders, the company or employees for there to be a protracted and public disagreement on the timing of his resignation".
Photo-Me has been locked in battle with the activist shareholders Principle Capital and Cycladic Capital in recent weeks, with the shareholders calling for Mr Sankey and Serge Crasnianski, the chief executive, to step down.
Mr Sankey said in the statement: "I believe that it is in the best interest of shareholders and the company that the matter of the timing of my resignation be brought to a swift conclusion. I have therefore decided to step down with immediate effect."
He will be replaced on an interim basis by David Young, a non-executive director. Mr Young said the dispute was a "distraction" and the pressure on Mr Sankey had been "obvious". He denied he would stand for election as chairman at the annual meeting on October 17, saying Photo-Me had a French culture and probably required a French speaker, which he is not.
Mr Crasnianski, who has been with the company for 44 years, is due to step down by November 30 2007.
Principle and Cycladic's disgruntlement centred on the company's poor performance, which they claim has occurred since Mr Vernon assumed chairmanship in 2005. They were also unhappy that shareholders had not been given a specific timeframe for the departure of 65-year-old Mr Crasnianski, whose intention to leave has been known for some time.