220 Actions and Tools at Hand | Brian JM Quinn | November 15, 2013

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220 Actions and Tools at Hand

Original Creator: Brian JM Quinn Current Version: Brian JM Quinn Show/Hide

Stockholders have a statutory right to access the books and records of the corporation. This power is an extremely important tool for stockholders to monitor the actions the board of directors and to root wrong-doing or malfeasance. However, the right to monitor a corporation's books and records is also subject to limitations. In the following cases we learn about using the “tools at hand” and the limits to their use.

Courts – as in Beam v. Stewart – regularly exhort plaintiffs to use Section 220 to seek out books and records prior to filing derivative complaints.  However, the 220 process can be lengthy.  Consequently, the economics of plaintiff litigation make it difficult for plaintiffs to both pursue 220 litigation and also maintain control positions in early filed derivative litigation. This challenge makes 220 actions a less than perfect vehicle for curbing the excesses of the litigation industrial complex. 

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  1. 1 Show/Hide More DGCL Sec. 220 - Inspection of books and records
    Original Creator: Brian JM Quinn Current Version: Brian JM Quinn
    Stockholders who comply with the requirements of §220 can access the books and records of the corporation. 
  2. 2 Show/Hide More Seinfeld v. Verizon Communications Inc.
    Original Creator: Brian JM Quinn Current Version: Brian JM Quinn
    Sec 220 – stockholder inspection rights
  3. 3 Show/Hide More LAMPERS v Lennar Corp
    Original Creator: Brian JM Quinn Current Version: Brian JM Quinn
    What are the standards for a 220 books and records action? PL must have a proper purpose and a credible basis for believing further investigation will uncover mismanagement
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June 10, 2016

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