Delaware Supreme Court Rejects Bright Line Rules in Section 220 Books and Records Proceedings

Thu, 23 Apr 2026 11:32:47 +0000

Posted by Michael J. Kahn and Brian Yang, Gibson, Dunn & Crutcher LLP, on Thursday, April 23, 2026

Editor's Note:

Michael J. Kahn is a Partner and Brian Yang is an Associate Attorney at Gibson, Dunn & Crutcher LLP. This post is based on a Gibson Dunn memorandum by Mr. Kahn, Mr. Yang, Monica K. Loseman, Brian M. Lutz, Jason J. Mendro, and Craig Varnen, and is part of the Delaware law series; links to other posts in the series are available here.

Last week, the Delaware Supreme Court held 3-2 that the Court of Chancery did not err by considering post-demand evidence and anonymous sources when determining whether a stockholder demonstrated a “credible basis” to suspect wrongdoing under Section 220 of the Delaware General Corporation Law.

“The general rule is that when a stockholder seeks relief under § 220, it will be limited to evidence identified in the demand and the information available to the stockholder when the demand was made. But under exceptional circumstances, the Court of Chancery may, in the exercise of its sound discretion, consider post-demand evidence that is material to the court’s credible-basis inquiry and not prejudicial to the corporation.”

Justice Traynor, writing for the Court

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The Harvard Law School Forum on Corporate Governance

Delaware Supreme Court Rejects Bright Line Rules in Section 220 Books and Records Proceedings