investor rights

I own stock in a company that was raided by the police on suspicion of criminal activity. it has been 7 months and no charges have been laid. 2 questions.

1) is there a time limit to keeping an investigation open with out laying charges?(the open invest. is affecting the stock price and company alot)

2) As a shareholder, do I have a right to the complete story and status of the investigation?

the company is located in canada, so if you don't know canada law I'm still interested in how it would be if it were in the us.

thanks in advance

My response:

A corporation's confidential communications with its attorney are protected by the attorney-client privilege. [Ca Evid § 950 et seq.] In a shareholder's suit against the corporation, the shareholder's status as a shareholder does not give him or her the right to inspect privileged documents. Inspection is permitted only under statutory exceptions to the privilege--e.g., the "joint client" exception, where the shareholder has an independent attorney-client relationship with corporate counsel (Ca Evid § 962.), or the "crime-fraud" exception where the attorney's services were sought to aid in the commission of a crime (Ca Evid § 956). [National Football League Properties, Inc. v. Sup.Ct. (Oakland Raiders) (1998) 65 Cal.App.4th 100, 107-111, 75 Cal.Rptr.2d 893, 897-900--shareholder suing corporation for breach of contract, breach of fiduciary duty, negligence and mismanagement not entitled to discovery of privileged documents]

Such inspection rights are enforceable as to the records of any California corporation, and also as to any out-of-state corporation keeping such records here or having its principal executive office here. [Ca Corp Sec. 1601(a)]

What records: Under the statute, the right of inspection extends only to the "accounting" records of the corporation or any subsidiary. (There is no statutory right to inspect other corporate records or physical property.) [Ca Corp Sec. 1601(a)]

When an investigation is over, then you can inspect those records because then they are "public." However, should the matter move into the litigation stage, then when that's over, you can look at court transcripts.

IAAL




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