Amendment of Section 220 of the Delaware General Corporate Law | Wyrick Robbins Yates & Ponton LLP

On March 25, 2025, Delaware enacted an amendment (the “Amendment”) to Section 220 of the Delaware General Corporation Law (“DGCL”).  The Amendment clarifies what materials constitute a corporation’s “books and records.”  It also defines the heightened standard that is applicable to demands for additional materials beyond the scope of a corporation’s “books and records.”

What does the Amendment contain?

A more clear definition of “books and records,” which is now limited to the following materials:[1]

• the certificate of incorporation and any agreements or other instruments incorporated by reference into the certificate of incorporation;
  • the bylaws and any agreements or other instruments incorporated by reference into the bylaws;
  • any stockholders meeting minutes and signed consents (for the preceding three years);
  • written or electronic communications to the stockholders generally (for the preceding three years);
  • any board or board committee meeting minutes and records of their actions;
  • materials provided to the board or board committees in connection with the actions taken;
  • annual financial statements (for the preceding three years);
  • certain agreements and contracts with stockholders; and
  • director and officer independence questionnaires.

Explicit procedural requirements for a stockholder’s inspection of corporate books and records:

• the demand must be made in good faith and for a proper purpose, which means a purpose reasonably related to the stockholder’s interests;
  • the demand must describe, with reasonable particularity, the purpose of the stockholder’s demand and the books and records sought; and
  • the books and records sought must specifically relate to the stockholder’s stated purpose.

Statutory limitations to Section 220 of the DGCL:

• as amended, Section 220 does not affect the right of a stockholder to seek discovery of the corporation’s books and records if the stockholder is in litigation with the corporation; and
• the Amendment does not affect the power of a court to compel the production of corporate records for inspection by a stockholder who has otherwise met the requirements of Section 220 or to impose reasonable restrictions on the production of books and records. 

Codification of the power of the Chancery Court to compel the production of additional materials outside the scope of “books and records” if:

• the petitioning stockholder has satisfied all requirements of Section 220(b); or
• the stockholder shows a compelling need for inspection to further the stockholder’s proper purpose; and
• the stockholder has demonstrated by clear and convincing evidence that the records sought are necessary and essential to further such proper purpose.

-or-

• the corporation does not have records of stockholder or board meetings or actions by consent or financial statements (or, in the case of a publicly listed corporation, that does not have director independence questionnaires) and additional corporate records would constitute the functional equivalent of any such books and records in response to an otherwise proper demand for inspection and would be necessary and essential to fulfill the stockholder’s proper purpose.

A corporation may impose reasonable restrictions on the confidentiality, use or distribution of books and records, including the ability to require such information to be deemed incorporated by reference in any compliant filed by the stockholder, and to redact portions of any books and records not specifically related to the stockholder’s purposes.  As noted above, the Chancery Court can also impose reasonable restrictions on the confidentiality, use or distribution of a corporation’s books and records.

[1] It should be noted that emails, text messages and other communications are not included within the scope of “books and records.”