Books And Records Request – Valuation As Proper Purpose

The Court of Chancery’s recent decision of In re: New Media Books and Records Action, C.A. No. 9984-VCN (Del. Ch. Dec. 23, 2015) demonstrates the Court’s reluctance to grant books and records inspection going back many years, when valuation is found to have been the proper purpose for which records have been sought.

In this case, plaintiffs sought inspection of books and records in the entity, for purposes ranging from valuation of plaintiffs’ holdings, to investigation into management misconduct.  The Court found that Plaintiffs demonstrated a proper purpose as to valuation.

Plaintiffs sought books and records dating back to 2004.  The dissolution of the company occurred in 2013, which formed the underlying basis for plaintiffs’ demand.  Vice Chancellor Noble found that records dating back to 2010 (but not 2004) would suffice to value plaintiffs’ shares as of 2013 in the company.