Delaware's New DGCL Section 220 Amendments: Transforming Books And Records Access

The recent amendments to Section 220 of the Delaware General Corporation Law (DGCL) are, in a word, significant. These amendments fundamentally shift how stockholders can access corporate books and records. The changes, which came through Senate Bill 21 enacted on March 25, 2025, attempt to strike a balance between stockholder rights and corporate efficiency—but let's be honest, they also create substantial new hurdles for stockholders seeking information. In this article, I'll walk you through the key changes, share my thoughts on their practical implications, and highlight what companies and stockholders need to know moving forward.

Key Changes to Section 220

1. Narrowed Definition of "Books and Records"

For the first time, the amendments specifically define what constitutes "books and records" accessible to stockholders. I find this particularly noteworthy because, until now, this term was remarkably undefined despite its central importance.

The new definition expressly limits "books and records" to specific enumerated categories, with some subject to a three-year limitation period from the demand date. Here's what's included:

• Certificate of incorporation (including incorporated agreements)
• Bylaws (including incorporated agreements)
• Minutes of stockholder meetings and signed consents (past three years)
• Communications by the corporation to stockholders (past three years)
• Lists of directors and officers
• Board and committee minutes and materials
• Annual financial statements

Let me tell you why this matters: this definition significantly narrows the scope compared to recent court decisions that had expanded access to include informal communications like emails and text messages. I've seen Delaware courts gradually broaden Section 220's reach over the years, and these amendments appear designed to rein in that expansion.

2. Enhanced Procedural Requirements

Under amended Section 220, a stockholder's demand must be made in good faith and for a proper purpose. It must describe the purpose and the records sought "with reasonable particularity." And the records sought must be "specifically related to the stockholder's purpose." These enhanced requirements create higher standards for stockholders to meet before gaining access to records.

The amendments also require that demands under oath specify the stockholder's status and be accompanied by documentary evidence of beneficial ownership. The Delaware Court of Chancery strictly construes these technical requirements, and if a petitioning stockholder fails to comply, the demand may be denied.

3. The "Compelling Need" Exception

While the amendments generally limit access to the defined categories of records, they create what I consider a crucial escape hatch. In the final legislation, stockholders may access records beyond those listed if they can establish:

• Compliance with Section 220(b)
• A "compelling need" for such records
• "Clear and convincing evidence" that these records are "necessary and essential" to further their proper purpose

It's worth noting that this exception wasn't in the original draft but was added at the suggestion of the Delaware State Bar Association's Corporation Law Section. This constitutes a potential pathway for stockholders to access communications like emails under certain circumstances, though the bar is set high. I'm particularly interested to see how courts interpret "compelling need" and what constitutes "clear and convincing evidence" in practice.

4. Confidentiality Provisions

The amended Section 220 codifies existing practices regarding confidentiality and use of produced materials. Corporations may "impose reasonable restrictions on the confidentiality, use, or distribution of books and records," including designating all produced documents as incorporated by reference into any subsequent complaint by the stockholder. This gives corporations greater control over how the information may be used once disclosed.

Practical Implications

For Corporations

1. Document Retention Policies: Corporations should immediately review their document retention policies, especially for the categories now explicitly listed in Section 220 and subject to the three-year limitation. This is low-hanging fruit for compliance.
2. Board Meeting Practices: With formal board materials becoming the primary focus of Section 220 demands, corporations should ensure that their board minutes and materials are comprehensive while being mindful of sensitive discussions. Too often, boards keep sparse minutes only to regret it later when stockholders come knocking.
3. Response Procedures: The five-business-day timeline for responding to Section 220 demands is very brief. Companies should develop clear procedures for responding within this timeframe, including confidentiality protocols. In other words, don't wait until you receive a demand to figure out how to handle it.

For Stockholders

1. Technical Compliance: Stockholders must ensure strict compliance with all procedural requirements, including proper documentation of ownership and statements under oath. The courts won't cut you any slack here.
2. Specificity in Demands: Gone are the days of fishing expeditions. Your demand must describe both the purpose and the records sought with "reasonable particularity" and establish how the records relate to the purpose. I'd recommend working with counsel experienced in crafting these demands.
3. Meeting the "Compelling Need" Standard: Want to access records beyond the enumerated categories (such as emails)? You'll need to prepare to meet the high "compelling need" standard with "clear and convincing evidence." This isn't a casual burden.

Current Trends in Section 220 Litigation

In recent years, Delaware courts have encouraged stockholders to seek books and records under Section 220 before filing stockholder derivative or post-merger damages suits, leading to increased use of this mechanism. The new amendments come in response to this trend and the expansion of Section 220's scope by Delaware courts.

Recent court decisions have cautioned against ordering production of emails when traditional board-level materials would accomplish the stockholder's proper purpose. Generally, stockholders can only obtain additional materials beyond formal board records by pointing to gaps or significant inconsistencies among the board-level documents.

Conclusion

These Section 220 amendments represent a significant recalibration—narrowed record definitions and enhanced procedural requirements favor corporations, while the "compelling need" exception provides a potential pathway for stockholders in exceptional cases. I'll be watching closely as Delaware courts interpret the new "compelling need" standard in the coming months. In my view, the pendulum has swung somewhat toward corporations, but Section 220 remains a critical stockholder tool—just one with higher hurdles now. This reflects Delaware's ongoing balancing act between corporate efficiency and stockholder rights.