Last month, Delaware courts and a federal district court issued several decisions of interest to corporate practitioners: (i) a Delaware Supreme Court reversal of a Court of Chancery decision that had established a bright-line rule barring a stockholder plaintiff from bringing a corporate books and records action if the plaintiff previously filed a putative derivative suit; (ii) a post-trial Court of Chancery ruling providing practical guidance to boards of corporations with a controlling stockholder in conducting a process for a third-party transaction that will pass both business judgment and entire fairness review; and (iii) in a case of first impression, a California federal district court’s guidance on the steps a board may and may not take to pre-determine the forum for putative stockholder derivative actions brought on behalf of the company.

Books and Records Inspections

Section 220 of the Delaware General Corporation Law, titled “Inspection of Books and Records,” grants any stockholder who makes a written demand on the company the right to inspect books and records “for any proper purpose,” and defines a “proper purpose” as “a purpose reasonably related to such person’s interest as a stockholder.” Despite its prosaic-sounding title, §220 codifies an important incident of stock ownership and generates a steady stream of decisions primarily addressing, frequently after the trial of a summary proceeding, (a) whether a stockholder has demonstrated a proper purpose for an inspection of the corporate books and records, and (b) the scope of any relief that should be granted.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]