books and records requests

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In late March, in order to try to stop a perceived flood of Delaware companies reincorporating in other states (in particular, Nevada and Texas), the Delaware legislature enacted a significant re-write of important sections of its General Corporation Law (DGCL).  Even though it has just been a few short weeks since the Delaware legislation was enacted, it is not too early to start asking whether the legislative changes will stop Delaware companies from reincorporating in other states. As discussed below, early indications seem to suggest that notwithstanding the legislative changes, at least some Delaware corporations will continue to seek to reincorporate elsewhere.Continue Reading Will Delaware’s Recent Corporate Law Revisions Stop Reincorporations?

Paul Ferrillo

Gregory A. Markel

Requests for the inspection of books and records pursuant to Section 220 of the Delaware General Corporation Law is an important part of corporate litigation in Delaware. One important issue for these types of proceedings is the scope of documents that these types of requests can reach, particularly when it comes to privileged documents and other pre-discovery material. In the following guest post, Paul Ferrillo and Gregory A. Markel take a look at recent Delaware case law addressing these important issues. Paul is a partner in the securities litigation group at the Seyfarth Shaw law firm and Greg is co-head of the securities litigation group at Seyfarth Shaw. Paul and Greg would like to acknowledge the substantial contribution of Seyfarth associate Sarah A. Fedner to the completion of this article. I would like to thank Paul and Greg for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors of topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Paul and Greg’s article.
Continue Reading Guest Post: Section 220 Books and Records Demands: Can You Obtain Privileged Documents Too?

Although Delaware’s courts recognized a cause of action for directors’ breach of the duty of oversight in the 1996 Caremark decision, claims against directors based on alleged oversight duty breaches have long been seen as difficult to plead and prove. However, in two 2019 rulings – the Marchand v. Barnhill decision (discussed here) and the Clovis Oncology decision (discussed here) – Delaware courts allowed breach of the duty of oversight claims to proceed. Now in a more recent ruling, the Delaware Court of Chancery has allowed yet another duty of oversight claim to proceed.

As noted in a May 1, 2020 post on the Duane Morris Delaware Business Law Blog (here), the most recent Delaware duty of oversight ruling reinforces the view that “directors and officers who neglect their oversight responsibilities may be personally liable for resulting harm to the company and its stockholders.” The Delaware Court of Chancery’s April 27, 2020 decision in Hughes v. Hu can be found here.
Continue Reading Another Delaware Breach of the Duty of Oversight Case Survives Dismissal Motion

Paul Ferrillo

As regular readers of this blog know, one of the many consequences that may follow for a company that experiences a cybersecurity incident is that it could get hit with a D&O claim. In the following guest post, Paul Ferrillo examine whether the increasing move toward cybersecurity-related D&O claims could in turn lead to an increase in prior Delaware Section 220 books and records inspection demands. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. I would like to thank Paul for allowing me to publish his guest post as an article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Paul’s article.
Continue Reading Guest Post: Board Cyber Oversight Duties and Delaware Section 220 Demands

The right of shareholders to demand inspection of companies’ books and records is of course nothing new. What is new is the increased frequency of books and records demands, often as a result of courts’ requirement for prospective shareholder claimants to investigate alleged misconduct of corporate executives before filing a lawsuit. The scope of the books and records requests is also expanding as well. These developments raise a number of D&O insurance coverage issues, which in turn has led to the rise of a variety of policy wording alternatives, as discussed in a recent paper.
Continue Reading D&O Insurance: Securing Coverage for Books and Records Requests