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Court Of Chancery Explains When Inspection Is Warranted

Fuchs Family Trust v. Parker Drilling Company, C.A. 9986-VCN (March 4, 2015) Everyone knows that a proper purpose is needed to justify inspection of a company's records and that investigating wrongdoing is such a proper purpose. But is it enough to just allege that alone, even when there is sufficient evidence that there was wrongdoing?  As this decision explains, it is also necessary that the inspection may lead to some sort of action. Here the wronging had already been addressed by a new board and further inspection of the company's records did not seem necessary.  Hence, inspection was denied.

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