As we’ve discussed previously, it is imperative that a stockholder making a books and records demand under Section 220 of the Delaware General Corporation Law (DGCL) comply with all statutory requirements. The recent decision of Martin Floreani et al. v. FloSports, Inc., C.A. No. 2023-0684-LM (Del. Ch. Oct. 31, 2024) underscores this
Section 220 Demand
Delaware Supreme Court Rejects Confidentiality Restrictions of Section 220 Demand Inspection
By Carl D. Neff on
In the decision of James Rivest v. Hauppauge Digital, Inc., No. 442, 2022 (Del. July 10, 2023), the Delaware Supreme Court considered the extent to which a Delaware corporation’s production of books and records under Section 220 of the Delaware General Corporation Law should be subject to confidentiality restrictions.
Background
James Rivest was a…
Section 220 Inspection Demand to Investigate Merger Process Granted
By Carl D. Neff on
Books and records inspection demands commonly arise in connection with a major transaction of a Delaware corporation, including a merger. The decision of Kosinski v. GGP, Inc., C.A. No. 2018-0540-KSJM (Del. Ch. Aug. 29, 2019) involved such a demand to investigate mismanagement, including whether plaintiff had established a “credible basis” to infer mismanagement.
In…
Confidentiality Order Requirement in Delaware Books and Records Actions Clarified by Supreme Court
By Carl D. Neff on
A question often arises as to whether a party making a books and records demand under 8 Del. C. § 220 must enter into a confidentiality agreement in order to inspect responsive documents of the corporation.
The Delaware Supreme Court, in the decision of Tiger v. Boast Apparel, Inc., 214 A.3d 933 (Del. Aug.
Delaware Court of Chancery Denies Plaintiff’s Request for Additional Books and Records in Section 220 Demand
By Carl D. Neff on
In the recent decision of Oklahoma Firefighters Pension and Retirement System v. Amazon.com, Inc., C.A. No. 2021-1484-LWW (Del. Ch. Jun. 1, 2022) (Mem. Op.), the Court of Chancery denied Plaintiff’s Section 220 request to demand additional inspection of Amazon’s books and records, finding that Plaintiff had not set forth a proper purpose for its…
Delaware Chancery Holds that Merger Caused Stockholder to Lose Standing to Pursue Section 220 Books and Records Demand
By Carl D. Neff on
In the recent decision of Swift v. Houston Wire & Cable Co., C.A. No. 2021-0525-LWW (Del. Ch. Dec. 3, 2021), the Delaware Court of Chancery considered whether a plaintiff lacked standing to inspect a Delaware corporation’s books and records under 8 Del. C. § 220 when the complaint was filed just hours after a…
Amendments to Delaware Alternative Entity Statutes Add “Necessary and Essential” Test to Books and Records Inspection Demands
By Carl D. Neff on
Effective August 1, 2021, the Delaware Limited Liability Company Act (“LLC Act”), the Delaware Revised Uniform Limited Partnership Act (“LP Act”) and the Delaware Revised Uniform Partnership Act (“Partnership Act”) have been amended to require that the “necessary and essential” standard apply to books and records inspection demands made under statutory or contractual grounds, subject…
Delaware Court of Chancery Dismisses Caremark Claim for Failure to Sufficiently Plead Demand Futility
By Carl D. Neff on
The Delaware Court of Chancery recently dismissed a derivative lawsuit asserting a Caremark claim for failure to adequately allege demand futility under Court of Chancery Rule 23.1. The opinion, Pettry v. Smith, et al., C.A. No. 2019-0795-JRS (Del. Ch. June 28, 2021), provides a helpful roadmap regarding the assertion of demand futility under Delaware…
Delaware Supreme Court Hands Down Important Books and Records Opinion; Limits Several Commonly Raised Defenses
By Carl D. Neff on
The Delaware Supreme Court recently handed down a significant decision implicating several common defenses raised to a books and records demand made under Section 220 of the Delaware General Corporation Law. The opinion is AmerisourceBergen Corporation v. Lebanon County Employees Retirement Fund, No. 60, 2020 (Del. Supr. Dec. 10, 2020).
The decision is an…
Stockholder Seeking Books and Records Need Not Prove an End-Use for Valuation of Shares
By Carl D. Neff on
It is well established that when a stockholder of a Delaware corporation makes a books and records demand under Section 220 of the DGCL, the stockholder must state a proper purpose for the requested books and records. “Valuation of a stockholder’s investment in a corporation, particularly where the corporation is privately held, has long…