Sanctuary, the troubled music group which Elton John, has suffered another setback, with Rod Smallwood, one of its co-founders, leaving the business and taking with him the company's oldest client - Iron Maiden.

Mr Smallwood is quitting to join fellow founder Andy Taylor, who was ousted from the group in May 2006 after the company was rocked by a plummeting share price and the discovery of "fundamental errors" in its accounts.

The iconic heavy metal band were discovered in a London pub by Mr Taylor in 1979. Mr Smallwood continued to manage the group even after Mr Taylor's ousting from the company.

Industry rumours in recent months suggested Iron Maiden were about to quit Sanctuary, but this confirmation will be a symbolic blow for the company. Mr Smallwood was a director until March 2006 and was paid £491,000 last year. It is understood he will not be receiving any severance package.

Though Sanctuary will no longer manage Iron Maiden, it will continue to make money from selling its merchandise and tour tickets.

The shares, which were 434p at the start of the year were unchanged at 14p in early morning trading.

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