The board of the CBI has drafted in lawyers to prepare for a prospective insolvency filing ahead of a crunch vote by thousands of its members next week.
Sky News has learnt that the crisis-hit business lobby group has hired an unnamed City law firm to provide advice on directors’ duties under company law.
City sources said on Tuesday that the legal advice was partly focused on CBI directors’ decision-making about continuing to trade the organisation as a going concern.
One said that an adverse outcome from a vote at next week’s extraordinary general meeting would leave its board with little choice but to begin a process to wind it up.
Such a scenario would be complicated by the Royal Charter by which it was incorporated in 1965, they added.
The legal advice on directors’ duties is not being provided by either Fox Williams, which oversaw a probe into allegations of sexual misconduct, or the CBI’s usual law firm, Clarkslegal.
“It is about making sure the board is complying with its obligations at an uncertain time,” a source said.
Next week’s ballot will take place on a ‘one member, one vote’ basis, with the CBI requiring a majority of votes cast in favour of a resolution the CBI’s ability to deliver a new mandate.
The CBI has already been hit financially by the cancellation of membership subscriptions by dozens of blue-chip members, including Aviva and the John Lewis Partnership.
Numerous others have suspended their engagement, while both the government and Labour have said they will not interact with the CBI while a police investigation into alleged rapes takes place.
On Wednesday, it will publish a prospectus ahead of its June 6 EGM which will set out the governance changes made by the organisation and the vision for its future of Rain Newton-Smith, its new director-general.
It is not expected to unveil a new name for the CBI at this stage.
Her blueprint is expected to comprise a slimmed-down organisation which will put some of its employees at risk of redundancy.
Sky News revealed earlier this month that the CBI had drafted in Principia, a business ethics consultancy, to aid a review of its culture.
In April, the UK’s biggest business group suspended most of its activities pending the outcome of a root-and-branch review.
It sacked its director-general, Tony Danker, after an inquiry into his behaviour, although he subsequently accused the CBI of “throwing me under a bus”.
Ms Newton-Smith told members that the CBI needed “concrete actions and transparency about what we’re doing, so that everyone feels empowered to share their stories and knows they will be supported”.
“Without a mandate from you, we have no future.”
“With a General Election looming, the voice of business urgently needs to be heard.
The CBI scandal has also ensnared John Allan, one of its former presidents, who has been forced to step down early from chairmanships at Tesco and Barratt Developments after anonymous allegations about his behaviour.
On Tuesday, the CBI declined to comment.
For all the latest business News Click Here
