Important Amendments to Shareholders’ Rights to Request Information
In August 2025, Delaware amended Section 220 of its General Corporations Law (the “DGCL”) to limit stockholders’ ability to request and inspect a corporation’s books and records.
The amendments narrow the scope of the shareholders’ information rights by narrowly defining the “books and records” that can be subject to stockholder demands. Stockholders’ ability to assess their investments and broadly monitor the conduct of corporate fiduciaries often depends upon such information rights. Stockholders also make books and records demands in advance of litigation, helping them to build a case against or exert pressure on the corporation, in some cases as part of an activist investor strategy, seeking to effect some change in corporate direction, structure, or strategy, or working with law firms preparing lawsuits.
Stockholders may make a books and records demand for any purpose that is reasonably related to their interest as such (referred to as a “proper purpose”), subject to certain procedural requirements (e.g., the demand must be in writing and made under oath, state the stockholder’s proper purpose, etc.). The corporation must provide such documents within fivedays of the request or the stockholder may bring an action to compel disclosure of the materials. The amendments restrict stockholders’ information rights by narrowly defining the specific categories and types of “books and records” that they can demand from a corporation.
Delaware courts generally took an expansive view of what materials constituted books and records capable of shareholder demand for inspection (despite the relevant standard being those records which are “essential and sufficient” for the shareholder’s “proper purpose” for the request. The courts felt that, within reason, such requests would prevent frivolous litigation by allowing shareholders to determine whether a claim had merit prior to filing a complaint or commencing a lawsuit.
Materials that could be demanded under Section 220 included corporate documents, board minutes, financial ledgers, business records, and internal emails – subject in each case to privilege and certain permitted confidentiality claims. This expansive view of courts, however, has led to significant disagreements and litigation over the outer boundaries of material available for inspection, particularly in the case of sensitive financial materials, trade secrets, and other material that a corporation wishes to redact prior to delivering in response to a shareholder request.
The amendments’ primary change is defining records capable of demand to include only:
- Certificate of incorporation and bylaws, along with any agreement or other instrument they incorporate by reference.
- For the preceding three years, (1) all stockholder meeting minutes and signed consents evidencing stockholder action taken without a meeting and (2) all written or electronic communications to stockholders generally.
- Board and committee meeting minutes and records of any board or committee actions, along with materials provided to the board or committee in connection with such actions.
- Annual financial statements of the corporation for the past three years.
- Agreements with current and prospective stockholders; and
- Director and officer independence questionnaires
Notably, this does not include contentious categories of documents such as internal communications and emails.
The amendments allow a company to place certain confidentiality and other conditions on materials produced in response to a demand for documents and to redact materials in certain cases, including where information is beyond a shareholder’s “proper purpose” for a request.
Overall, these changes limit shareholders’ rights to request corporate information under the DGCL. These changes will alleviate certain concerns long held by the business community over requests made as a form of pre-litigation discovery or with other ulterior motives than corporate oversight. Conversely, shareholders and shareholders advocacy organizations view these changes as decreasing transparency and weakening oversight of the company and its fiduciaries.
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