Legal Question in Legal Ethics in California

Re: Rights of Board Director

Corporate directors have the absolute right at any reasonable time to inspect and copy all corporate books, records, and documents of every kind, as provided in Cal. Corp. Code, � 1602, and a court may enforce this right with just and proper conditions. Cal. Corp. Code, � 1603. This right represents a legislative judgment that directors are better able to discharge their fiduciary duties if they have free access to information concerning the corporation. The absolute right, however, is subject to exceptions and may be denied where a disgruntled director announces his or her intention to violate his or her fiduciary duties to the corporation, such as using inspection rights to learn trade secrets to compete with the corporation.

Although the "absolute right" to inspect documents is the general rule in California, Cal. Corp. Code, � 1602, must be read with section Cal. Corp. Code, � 1603, authorizing a court to enforce the right of inspection with "just and proper conditions."

From your question, it sounds as though the directors review of the personnel files may not have been under just and proper conditions.

If I can be of any further assistance, please do not hesitate to contact me.

Yours truly,

Bryan

877.201.8728