Section 18-305 of the Delaware LLC Act governs the rights of inspection of books and records of a Delaware LLC by a manager or member. For links to prior posts discussing inspection rights in the LLC context, see links at the end of this post.
A recent Court of Chancery opinion examined inspection rights under the LLC Act, in the decision of RED Capital Investment L.P. v. RED Partner LLC, C.A. No. 11575-VCN (Feb. 11, 2016). There, the Court analyzed inspection rights under sections (a) and (b) of Section 18-305, the former conferring inspection rights upon a member, and the latter conferring inspection rights upon a manager of the LLC.
The Court reiterated that the LLC Act may be displaced by the terms of the LLC's operating agreement. "Such agreements operate to displace otherwise applicable default provisions in Delaware's Limited Liability Company Act." Slip op. at 6. The agreement at issue provided for more limited inspection rights to members than to managers. The Court then analyzed found that plaintiff stated a "proper purpose" warranting the inspection of books and records under Section 18-305 and the relevant provision of the operating agreement.
See below additional posts on books and record demands made upon Delaware limited liability companies:
Delaware LLC "Books and Records" Demand
Delaware LLC Books and Records Demand: Stating a "Proper Purpose"
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
