when one of two directors walk away from the business

File the cheating case, report to ROC about that Director, Block that person's DIN

Give the public notice in Local paper + national daily.

You can adjust the capital as compensation, if cheat vetted by court, as per courts instruction. Even the personal assets of that director can be sealed, if the capital is insufficient against the cheat.

Is that u are talking abt a limited company organisation? it looks as if it is a partnership business. Laws governes these two types of organisation in different ways. In Ltd companies, the amount contributed by director 2, would stands as SHARES in his name. The shares,  cannot be transferred to other unless director 2 signs the transfer form, and other rules comes into play. Any person(say director 3) can join the management. No capital contribution is requried in the nature of qualification shares or otherwise. But he cannot be treated as the owner of the share held by director 2. director 2, is a member of the company as far as the shares stands in his name.