Delaware Code 220: A Shareholder's Rights To Board Minutes
Any shareholder of a corporation is entitled to receive a copy of the minutes of board meetings. Companies that are incorporated in Delaware offer shareholders an extra layer of transparency when it comes to access to corporate records, under Section 220 of the Delaware General Corporate Law (DGCL) statutes.
Why So Many Companies Incorporate In Delaware
Before we dig too far into Section 220, let's talk a little about why so many companies choose to file their Articles of Incorporation in Delaware. What makes the state such an attractive place to do business? Well, Delaware has some of the most business-friendly laws in the US, including a court, the Chancery Court, that is devoted solely to hearing business cases. The other thing that sets Delaware apart is that in the Chancery Court, a panel of judges, rather than a citizen jury, hears and rules on cases that come before it.
What is Section 220?
This is a section of the state law that guarantees any corporate shareholder certain rights to information regarding a given company. The primary function of Section 220 is to open the books and records to any stockholder who has credible evidence that the board has acted in ways that are not beneficial to the stockholders of the company.
Boards Worry That Section 220 Leaves Them Exposed
Many corporate boards and their legal teams are not fans of Section 220. They feel that allowing any stockholder to inspect records can compromise confidential but perfectly legal activities, and can open the door for a bad actor to buy a few shares of stock and cause trouble.
Delaware's Chancery Court Usually Sides With The Stockholders
The Chancery Court sets a low bar for providing credible evidence of wrongdoing. Stockholders who request access to "books and records" simply have to present the reasons they believe it has occurred—they do not have to prove anything. Because any stockholder, even an individual with just a few shares and a hunch, has the right to inspect the ledgers and correspondence of the corporation, boards will often fight the request.
The Chancery Court has the final say in allowing a stockholder to inspect the books and records, and will typically grant the request if the burden of "proper purpose" is met.
Here are the documents that are covered under Section 220.
|Document:||What It Means:|
|Stock ledger||A list of how much stock is available in the company, how much is held by insiders, how much is held by the public, etc.|
|List of stockholders||A list of anyone who holds more than a certain amount of shares within the company. This list is only available for shareholders who hold more than a certain percentage of the company.|
|Pertinent correspondence, such as memoranda, emails, or other communications||Relevant company documents about where people within the company are attempting to steer the company.|
|Minutes of board meetings||The tick-by-tick of what occurred in any board meeting for a company that you own shares in.|
Board Minutes Can Provide Clues To Wrongdoing
Reading the minutes of a board meeting is typically a bore. But if you suspect that something is amiss in the way a company is doing business, the minutes can be quite juicy reading, indeed. Since the minutes are a detailed record of the meeting, listing all participants, topics of discussion, and any and all discussion involving the company, having all that information can help you determine if you have an actual complaint.
This information is also part of the minutes.
- The purpose of the meeting. Boards usually meet quarterly; oddly times meetings may be relevant
- Name and title of the persons acting as meeting chairman and secretary
- Was the meeting held following proper notification? Was notice appropriately waived if not?
- Names and titles of officers and directors present at the meeting, and whether a quorum was present
- Who made and seconded motions, and the results of any votes
- Description of any reports, and the name and title of the presenters
How You Can Request Copies Of The Board Meeting Minutes
If you are a stockholder in a Delaware corporation, you can typically access meeting minutes online. Some companies post their minutes to the public; others require a password. If you want to see minutes from previous years, you can request that information under Section 220. Here's how.
- Submit a written request to the company's corporate address of record
- Include your standing to access the information (your status as a stockholder)
- Reference the dates you want to inspect
You do not need any evidence of wrongdoing to access meeting minutes, unlike inspecting books and records. If the company is reluctant to provide the minutes, keep in mind that delivery is not optional.
DoNotPay Can Help You Get Copies Of Board Meeting Minutes
If you want to submit a Delaware Code 220 request but don't know where to start, DoNotPay has you covered. Create your own cancellation letter in 3 easy steps:
- Search Delaware Code or Stock Inspection on DoNotPay.
- Confirm that the company you are hoping to inspect is a Delaware Corporation and that you are a stockholder.
- Tell us why you are requesting the information and what you plan on doing with it.
- Specify the names or types of documents you are requesting.
- That's it! DoNotPay will generate the formal request letter on your behalf and send it to the company.
Why Use DoNotPay?
We have the expertise to make sure you get the information you're entitled to quickly and without hassle. Our team is dedicated to helping people like you get the results they need without having to hire costly corporate legal help. We can not only help you get information under Delaware Code 220, but we can file other complaints with the SEC on your behalf. Don't let a fancy legal letterhead intimidate you; sign up with DoNotPay for a fast resolution to your problem.
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