A member of the Board of Directors of a California corporation has the “absolute right” to inspect corporate records as provided by Corporations Code Section 1602.  However, this supposed “absolute” right is subject to limitations imposed by California courts, for example, that a director who has filed his own shareholder suit against a corporation is deemed to have a conflict of interest, with divided loyalties to the corporation vs. using corporate records to advance the director’s personal interest in obtaining damages from the corporation, such that the director’s right of access to records is lost (Tritek Telecom, Inc. v. Superior Court, 169 Cal.App.4th (2009)).  In a new decision last week from the California Courts of Appeal, a corporation’s director was similarly found to lose the “absolute” right, or indeed any right at all, to have access to and inspection of corporate records as a director, because during his suit for access to denied records, he was not re-nominated to the board or re-elected and hence became a former director when his annual term of service expired.  The court ruled on grounds of standing, that to maintain an action as a director for access to corporate records, the person must remain a director throughout the duration of the legal action.  As soon as they cease to be a director, they lose standing and their action must be dismissed.  (Wolf v. CDS Devco, California Court of Appeal No. DO55034, June 17, 2010)

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