Delaware Update: Confidentiality of Corporate Records, Board of Directors Oversight, Shareholder Derivative Claims

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Delaware is the state of incorporation for 66% of the Fortune 500 and over half of all companies whose securities trade on the NYSE and other exchanges. Delaware's Supreme Court and Court of Chancery are the preeminent venues for resolving various corporate disputes. Recently, there were several decisions related to essential aspects of corporate law.

Lebanon County Employees’ Retirement Fund v. AmerisourceBergen Corp. sets out to interpret DGCL Section 220 by analyzing the prerequisites that must be satisfied in order to pursue an inspection, including those prerequisites that are not explicitly outlined in the statue. The case also illustrates that Section 220 is often more complicated than first anticipated.

In Marchand v. Barnhill, the Delaware Supreme Court elaborated on the monitoring, reporting, and oversight obligations imposed on directors, as originally articulated in the Caremark decision. In light of the court’s guidance in Marchand, corporate counsel will need to ensure that boards, particularly for companies in highly regulated industries, have implemented an oversight system and are appropriately involved in the reporting system.

Finally, the Delaware Supreme Court affirmed the dismissal of a shareholder's suit against the directors of Uber Technologies Inc. because the shareholder-plaintiff failed to make a pre-suit demand on Uber’s board of directors. The court applied the Rales test while distinguishing the facts from the Disney derivative litigation of the early 2000s.

Listen as our authoritative panel discusses these critical cases of fundamental corporate principals as determined by the Delaware courts and looks towards the landscape of future decisions by the Delaware judiciary.