Strict Compliance with Statutory Requirements in Books and Records Action is Required

"Strict adherence to the Section 220 procedural requirements for making an inspection demand protects the rights of the corporation to receive and consider a demand in proper form before litigation is initiated."

The recent decision of Barnes v. Telestone Technologies Corp., 8513-VCG (Del. Ch. July 10, 2013) highlights the importance of strictly complying with the statutory requirements in a books and records action under Section 220 of the Delaware General Corporation Law.  This decision is relevant to any shareholder seeking to assert a books and records action, and any corporation defending against such action.

In this case, the Court of Chancery dismissed the Section 220 complaint of plaintiff Barnes on the grounds that Barnes failed to provide evidence of his beneficial ownership of company stock at the time he sent his inspection demand.  This is an express requirement under Section 220.