Legal Question in Business Law in California

Re: employee conduct

Shareholder suits against a close corporation; especially brought by a former employee can become very legally complicated and intricate. That being said, I am hesitant to provide any input without knowing more about the situation. I do however have experience in this area.

I would be willing to discuss some of the issues concerning your case to see how I may be of assistance.

I offer prospective clients an initial consultation of 30 minutes for free.

I look forward to speaking with you.

Yours truly,

Bryan

Bryan C. Becker, Esq.

Principal

Law Office of Bryan C. Becker

The Koll Center

501 W. Broadway, Suite 800

San Diego, CA 92101

Toll Free: 877*201*8728

Direct: 619*400*4929

Fax: 619*400*4810

Re: employee conduct

If there's a lawsuit, you'll get to see her stuff. You should already be consulting a lawyer and getting your ducks in a row.

Re: employee conduct

You can try to file a police report, but don't hold your breath on getting cooperation. You can file suit for the 'theft' related causes of action, but that is not going to get return of your property quickly or at all, and it likely will force her to counter-sue if she hasn't already. Sounds like you're going to need legal defense and representation, so start arranging it. Feel free to contact me if interested.

Re: employee conduct

You can demand the return of the notebook, but probably not its contents.

Corporations Code section 1600(c) gives a shareholder the right to inspect and copy the corporation's records for any purpose reasonably related to the shareholder's interests as such. Section 1600(d) goes on to add that the inspection and copying may be done by the shareholder in person or through an agent or attorney, and that the right to inspect and copy cannot be limited by the corporation's articles or bylaws.

Section 1600(c) says the inspection and copying can be done at any time during normal business hours upon written demand to the corporation. Here, there was probably no written demand made, but my guess (without doing research on the possible issue) is that the purpose of the written demand is to identify the person making the demand and notify the person in charge of the records what the demand is about. Since those purposes were already met when the shareholder is also employed as the keeper of the records, I think a court would consider the written demand a futile act and deem it not to have been necessary. I could be wrong, and if I were defending you I would argue that it was necessary, but I think she wins on the issue of whether she was entitled to copy the records for purposes of the proposed suit. I would certainly not advise you to call the cops!

Further, although I have no idea whatever as to her underlying gripe, my hunch based on many years experience running small corporations is that the company will have good defenses to whatever she alleges when and if any suit is filed.

Re: employee conduct

Bryan Whipple is correct. your employee, as a shareholder, has the right to inspect the books.

However, you should explore the option of dissolving the corporation to rid yourself of the ex-employee as a shareholder (this would involve buying her out, or letting her buy you out). This option may depend on the nature of your business.