DealLawyers.com Blog

The folks at Sidley recently came up with this list of seven Delaware books & records cases that every practitioner should know. Reflecting the increasing importance of Section 220 litigation, every case but one on the list was decided within the past five years.  Here’s an excerpt on last year’s Amerisource Bergen decision:

AmerisourceBergen Corp. v. Lebanon Cnty. Emps. Ret. Fund, 243 A.3d 417 (Del. 2020): It is well established that under Section 220, a stockholder seeking to inspect the books and records of a corporation must demonstrate a “proper purpose” for inspection. In this seminal opinion from 2020, the Delaware Supreme Court affirmed a Chancery Court decision that found a sufficient proper purpose and required the company to produce corporate books and records in response to stockholders’ demand to “investigate possible breaches of fiduciary duty, mismanagement, and other violations of law,” regarding the corporation’s distribution of opioids and related ongoing governmental investigations.

While recognizing that a stockholder must demonstrate a “credible basis” from which wrongdoing may be inferred, the Supreme Court affirmed that “where a stockholder meets this low burden of proof . . . [the] stockholder’s purpose will be deemed proper under Delaware Law” and that the stockholder “is not required to specify the ends to which it might use the books and records.” Moreover, the Supreme Court affirmed that a demanding stockholder need not demonstrate the suspected wrongdoing it seeks to investigate is “actionable” under Delaware law.

– John Jenkins