The Delaware Court of Chancery yesterday denied a Motion
to Dismiss a shareholder's demand for books and records of a company
based on DGCL Section
220. The Court ruled that the issue of whether this action was an attempt
to circumvent the stay on discovery imposed in a related federal securities
action, was an issue to be decided at trial, which was scheduled for November.
An article about the case is available here.
A voluminous number of Section 220 decisions have
been highlighted on these pages over the last 6 and one-half years. The
large collection of articles and case summaries regarding Section 220 that
have been published on this blog can be accessed here. One
conclusion, among many, that can be made from the dozens of cases summarized
and related articles about Section 220 at the above link, is that
despite clearly recognized proper purposes for Section 220 actions, there is an
air of indeterminacy about Section 220 issues due to factual
details that vary from case to case.
The bottom line is this: a company that is determined to
make it difficult for a shareholder to obtain books and records under Section
220, can at least make it a very expensive and laborious exercise, and even
after a trial awarding books and records, a company can still engage in Fabian
tactics and tarry for months with pedantic disputes about exactly which
documents should be produced. Sometimes one might get lucky and the documents
will be provided quickly, but it would be unrealistic to view Section 220 demands as
exercises for the faint-hearted.
Read more Delaware business
litigation case summaries and commentary on Delaware
Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X.
Pileggi, of Eckert Seamans.
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