Legal Updates

A company may be entitled to receive criminal investigation materials against its manager in order to open proceedings against the manager

October 19, 2021

After a controlling shareholder in a company was convicted of fraud, breach of fiduciary duties and embezzlement of funds of the company as well as various other offenses under the Securities Law, the company filed a claim against him and demanded to receive all the criminal investigation materials.

The Supreme Court held that the criminal proceeding materials should be each examined and the company is entitled to receive all material relevant to the case. A party to a civil litigation is entitled to receive from the other party all material relevant to the case. While there is usually a broad approach to the question of relevance, where any document which may assist a party to pursue its case is considered relevant, it is not a sweeping qualification for a party to review materials without limitations and materials will be given only where there is correlation between the materials and the issue of litigation. The fact that the materials were used in a criminal proceeding does not preclude the disclosure but also does not oblige it, and no sweeping relevance can be assumed, especially in light of the existence of conflicting interests of third parties. Therefore, the criminal investigation materials must be each examined and the company is entitled to any material relevant to the proceedings against the manager.