The Do’s and Don’ts of Stockholder Section 220 Demands

In Christian Schank, et al. v. Ariz. Isotopes Sci. Rsch. Corp, decided in late 2025 by the Delaware Chancery Court and for which a final report was issued on April 24, 2026, the plaintiffs representing more than 5% of the company’s stock demanded to inspect Company records under Section 220 of the Delaware General Corporation Law (DGCL). When the defendant company did not provide a single responsive document, and in fact attempted to cancel the plaintiff’s shares in the company, the plaintiffs filed a lawsuit.
 
Recent Changes to Section 220 Demands
 
Through SB 21, Delaware amended its DGCL to, among other things, limit the scope of Section 220 demands.
 
The amendment limits books and records to, for example, corporate governance documents (bylaws, certificate of incorporation), minutes, records and materials of board or committee meetings, and director and officer independence questionnaires, and annual financial statements going back 3 years. Informal emails are not included in this list, for example.
 
The court may require additional document requests if there is a  “compelling need” by “clear and convincing evidence for these other records to be produced.”
 
Further, the company can require confidentiality.
 
How to respond to a Section 220 demand:
 
Under guidance of company counsel,
 
Do
• Analyze the request to see if it is properly framed and permissible in scope
• Produce the basic demands responsive to valid requests
• Redact any sensitive or privileged communications
• Produce documents subject to a confidentiality agreement
• Regularly maintain materials, including detailed minutes, and make attorney-client exceptions where appropriate
• Engage constructively in good faith with requests
 
Do Not
• Refuse to provide any materials unless company determines in good faith that there is no proper purpose and that the request is out of scope
• Expand the scope of materials provided
• Stonewall
• Retaliate
• Engage in bad faith
 
In this case, the court found that the plaintiffs’ request was proper. The purpose was “to communicate with other stockholders, value Plaintiff’s interests in the Company, and investigate potential wrongdoing.”
 
However, the court “limited the scope of inspection because Plaintiffs failed to demonstrate that more documents were necessary.” The plaintiffs initially requested “14 categories of documents…that included the Company’s stock ledger, documents reflecting the identities of the Company’s board members…, the Company’s most recent audited financial statements, board minutes, written consents of the Board, and copies of all corporate charters and bylaws.”
 
As has been stated in prior caselaw, “The court must give the petitioner everything that is essential, but stop at what is sufficient.” (quoting In re Aspen Tech., Inc., Section 220 Litig., 2025 WL 2828269).
 
Ultimately, had the company had more robust internal controls and communications in place, provided what was essential, and stopped at what was sufficient, it could have avoided the lion’s share, if not all, of this litigation.

Jerome Fogel is co-founder of Fogel & Potamianos LLP, a firm recognized by Chambers & Partners’ California Spotlight Guide for excellence in corporate law. A partner in the Corporate Practice Group and Chair of the Sports & Entertainment Group, he is known as an innovator and dealmaker in the legal community. He serves as a general counsel to privately held companies, including representation in mergers and acquisitions.

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