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Brett M. McCartney. Brett M. McCartney.

Books and records actions are heralded as the “tools at hand” for litigators pursuing shareholder claims against a corporation.  In fact, the Delaware Court of Chancery has been critical of litigants who failed to take advantage of a shareholder’s right to request the books and records of a corporation prior to commencing litigation against the corporation.  See, e.g., Thermopylae Capital Partners v. Simbol, 2016 WL 368170, at *17 (Del. Ch. Jan. 29, 2016). And while many shareholders have utilized Section 220’s summary proceeding to get a corporation’s books and records, Delaware courts have approved certain conditions on the use of those records. As discussed below, the Court of Chancery recently approved a company’s proposed incorporation condition, assuring the company that all the documents it produces pursuant to a books and records demand will be incorporated, even if not explicitly referenced, in any subsequent litigation where the plaintiff relies on any of the records produced by the company.

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