A shareholder cannot pursue a books-and-records request if the potential derivative action arising from the request would be barred by the statute of limitations, the Delaware Court of Chancery has ruled. Although there is no statute of limitations for books-and-records requests, the court’s opinion held it will not grant a shareholder’s request if his or her likely action will be time-barred.
Vice Chancellor John W. Noble said in Wolst v. Monster Beverage a requirement for a books-and-records request, also known as Title 8, Section 220 of the Delaware General Corporation Law, is a proper purpose. Noble ruled that initiating a derivative action tolled under the statute of limitations is not a proper purpose.
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