This Amendment to SS 1 for Senate Bill 21 clarifies that a corporation may require, as a condition to producing books and records to a stockholder under a Section 220 demand, that the stockholder agree that any information included in the corporation’s books and records produced to that stockholder is deemed incorporated by reference in any complaint filed by or at the direction of the stockholder in relation to the subject matter referenced in the demand.

Plain English Breakdown

The official source confirms the bill was defeated by the House on March 25, 2025; therefore, it has no legal effect.

Amendment to Senate Bill 21 on Stockholder Access to Corporate Records

This amendment allows corporations to require stockholders to agree that shared records count as part of future legal complaints and lowers the proof standard for courts ordering companies to share additional documents.

What This Bill Does

• Allows corporations to require stockholders to agree that any information in produced books and records is deemed incorporated by reference in related lawsuits filed by the stockholder.
• Changes the rule so stockholders must reasonably identify needed documents and show they likely exist, instead of proving a compelling need.
• Lowers the proof standard for courts from 'clear and convincing evidence' to 'preponderance of the evidence,' meaning it is more likely than not that records are necessary.
• Updates state law to match standards set by a 2019 Supreme Court decision regarding record production.

Who It Names or Affects

• Corporations subject to Section 220 demands for their books and records.
• Stockholders who file requests or lawsuits to inspect corporate documents.
• Courts that decide whether a corporation must produce specific records in legal proceedings.

Terms To Know

Section 220 demand

A formal request by a stockholder for a company to show its books and records under state law.

Incorporated by reference

Using information from one document as part of another legal filing without rewriting it.

Preponderance of the evidence

A standard where a fact is more likely true than not, or greater than 50% certainty.

Limits and Unknowns

• This bill was defeated by the House on March 25, 2025, so it did not become law.
• The text does not specify if these rules apply to all types of corporations or only those in specific industries.

Official Summary Text

This Amendment to SS 1 for Senate Bill 21 clarifies that a corporation may require, as a condition to producing books and records to a stockholder under a Section 220 demand, that the stockholder agree that any information included in the corporation’s books and records produced to that stockholder is deemed incorporated by reference in any complaint filed by or at the direction of the stockholder in relation to the subject matter referenced in the demand.
This Amendment to SS 1 for Senate Bill 21 also changes the standard in a proceeding brought by a stockholder under subsection (c) of Section 220 of Title 8 to compel the inspection of additional records to (1) reasonably identifying the documents the stockholder needs and making a showing such records exist (instead of a compelling need); and (2) demonstrating by a preponderance of the evidence, or more likely than not, rather than the higher standard of clear and convincing evidence that such specific records are necessary and essential to the proceeding. This is intended to codify the standard for production of books and records set forth in the Supreme Court’s decision in KT4 Partners LLC v. Palantir Techs. Inc., 203 A.3d 738 (Del. 2019).

Current Bill Text

Legislation Document

SPONSOR:

Rep. Wilson-Anton

HOUSE OF REPRESENTATIVES

153rd GENERAL ASSEMBLY

HOUSE AMENDMENT NO. 5

TO

SENATE SUBSTITUTE NO. 1

FOR

SENATE BILL NO. 21

AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 192 by inserting “

produced to a stockholder

” after “

records

” and before “

is

” as they appear therein.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 on lines 239 and 240 by deleting “

has made a showing of a compelling need for an inspection of such records to further the stockholder’s proper purpose;

” as it appears therein and inserting in lieu thereof “

reasonably identifies the documents the stockholder needs and provides a basis for the court to infer that those documents likely exist;

”.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 241 by deleting “

clear and convincing

” as it appears therein and inserting in lieu thereof “

a preponderance of the

”.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 242 by deleting “

such

” as it appears therein and inserting in lieu thereof “

the stockholder’s proper

”.

SYNOPSIS

This Amendment to SS 1 for Senate Bill 21 clarifies that a corporation may require, as a condition to producing books and records to a stockholder under a Section 220 demand, that the stockholder agree that any information included in the corporation’s books and records produced to that stockholder is deemed incorporated by reference in any complaint filed by or at the direction of the stockholder in relation to the subject matter referenced in the demand.

This Amendment to SS 1 for Senate Bill 21 also changes the standard in a proceeding brought by a stockholder under subsection (c) of Section 220 of Title 8 to compel the inspection of additional records to (1) reasonably identifying the documents the stockholder needs and making a showing such records exist (instead of a compelling need); and (2) demonstrating by a preponderance of the evidence, or more likely than not, rather than the higher standard of clear and convincing evidence that such specific records are necessary and essential to the proceeding. This is intended to codify the standard for production of books and records set forth in the Supreme Court’s decision in KT4 Partners LLC v. Palantir Techs. Inc., 203 A.3d 738 (Del. 2019).