Eric Reid, 62, chairman of Texstyle World, and his son Mark, 34, its managing director, were suspended by the board last Friday after "certain information" came to light, the company said yesterday.
A statement gave no details but said: "An investigation is expected to be completed within a month." It added: "It should be stressed that the company continues to trade normally under the supervision of the remainder of the management team."
Texstyle World has 85 stores across Britain and employs 1,200 workers. It had been planning to float on the stock market next year.
The Reids featured two months ago in a list of Britain's richest people, with a net worth of about pounds 50m.
Mr Reid senior built the firm up from an original family-owned high street chain, and was later joined in the business by his son.
They sold overall control to financial institutions, including Electra Fleming and Royal Bank Development Capital, in 1997. It is believed that the Reids have retained a 25 per cent stake.
More recently it is thought the board has been unhappy about the way the company was being run.
The original high-street chain was built up by Eric Reid in the 1960s and 1970s, when it was known as Terleys.
In 1980 the stores started to move to out-of-town sites and were rebranded under the name Texstyle World, with a more designer-led and fashionable content.