Tuesday, February 9, 2021
This past year, Proskauer’s private fund litigation blog highlighted a Delaware Chancery case adopting an expansive view in favor of parties seeking information from companies under Section 220 of the Delaware General Corporation Law. The Delaware Supreme Court recently affirmed the Chancery Court’s ruling, providing additional appellate guidance on Section 220 and endorsing limits the Chancery Court set on certain defenses companies may have against such requests.
Section 220 allows stockholders to inspect books and records of a Delaware corporation for any proper purpose and to compel inspection if refused. Recognized “proper purposes” to inspect books and records include, among others, determining director independence and investigating disclosures, waste, and possible mismanagement or self-dealing. For investigatory purposes, stockholders must demonstrate a credible basis to infer possible mismanagement warranting further inves