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Floreani v. Flosports Inc., No. 491, 2024 (Del. Nov. 24, 2025)
As this decision illustrates, Section 220 of the DGCL contains several form and manner requirements for books-and-records demands that the Delaware courts will enforce to deny inspections. Here, some family members lacked insight into a closely-held business for several years and served books-and-records demands for the purpose of valuing their shares. The company rejected an initial demand through counsel for failure to meet Section 220’s statutory form and manner requirements. The company rejected a second demand through counsel for similar reasons, citing the statute’s “under oath” requirement and the two-week gap between the supporting affidavits and the demand itself. The stockholders sued and, thereafter, served a third demand while simultaneously moving to amend their complaint to reflect their third demand. The company was successful at the trial court level, and it likewise succeeded on appeal.
On appeal, the Supreme Court applied the form and manner requirements to find the second and third demands deficient. For the second demand, the Court enforced the “under oath” requirement, citing the two-week delay between the affidavits and the demand and the lack of evidence that the demand did not change substantively in that timeframe. According to the Court “a substantial lapse of time between the two events permits the argument that the version a stockholder verified differs substantively from the version sent to the company.” For the third demand, the Court enforced the statutory five-day waiting period for applications to the Court of Chancery after making a demand, finding that the plaintiffs’ motion to amend their pending complaint within that five-day grace period violated the statute.
