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 bill was defeated in the House, so its current status is uncertain and it may not become law.

Amendment to Allow Corporations to Require Stockholder Agreements

This amendment allows corporations to require stockholders to sign an agreement before accessing company records, stating that information from these documents can be used in related legal complaints.

What This Bill Does

• Allows a corporation to ask shareholders to agree that any information from the corporation’s books and records produced to them is incorporated by reference into any complaint filed by or at the direction of the shareholder.

Who It Names or Affects

• Corporations and their shareholders

Terms To Know

Section 220 demand

A request by a shareholder to see the corporation's books and records.

Incorporated by reference

Including information from one document into another without copying it directly.

Limits and Unknowns

• The bill was defeated in the House on March 25, 2025.
• It is unclear how this amendment would be enforced or interpreted by courts.

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).