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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Supreme Court Upholds Section 220 Jurisdictional Rules
The right of a stockholder to inspect a company's books and records is govenned by Section 220 of the DGCL. A beneficial owner must first show proof of beneficial ownership, however, and Section 220 tells how to do so. Here the plaintiff for some reason just ignored Section 220's requirements to show beneficial ownership. When then faced with a motion to dismiss, he argued that he could supply that proof later because it was just a clerical mistake to not do so when his complaint was filed. The Delaware Supreme Court forcefully rejected that argument and upheld the dismissal of his complaint.
Note that the Supreme Court sidestepped the holding of the Court of Chancery that once it filed a derivative suit, this plaintiff lost its rights under Section 220.