Inspecting Corporate Books and Records in a Digital World: The Role of Electronically Stored Information is the title of the latest law review article that I co-authored with Kevin Brady. A former associate also joined us as a co-author. The article will appear in The Delaware Journal of Corporate Law in the issue distributed this month in hard copy, which is designated as Vol. 37, No. 1, cited as 37 Del. J. Corp. L. 163 (2012), also is now available online and is also now available on SSRN.
The synopsis below describes the cutting edge issues we address regarding the deficiencies in the current state of the law regarding statutory demands by a shareholder for books and records of a corporation purusant to DGCL section 220.
This Article examines Section 220 of Delaware General Corporation Law (“DGCL”) which generally provides limited rights to shareholders seeking “books and records” of a corporation. The Article presents an argument that encourages Delaware’s Legislature and courts to address the archaic nature of the phrase “books and records” by modernizing and making more meaningful the statute and case law which do not reflect the current world of electronically stored information (“ESI”) and the fact that nearly all information in today’s digital world is created and maintained exclusively in electronic form and is not reduced to “hard copy.” While certain judicial decisions have reflected a reluctance to consider ESI in this context, no Delaware court has directly and authoritatively addressed the issue of whether ESI must be produced in connection with a proper Section 220 demand. This Article provides persuasive reasoning why the Delaware Legislature and the Delaware courts should require the production of appropriate ESI in response to a proper Section 220 demand in order for Section 220 to maintain any practical usefulness.