In its recent opinion in Floreani v. FloSports, Inc., No. 491, 2024 (Del. Nov. 24, 2025), the Delaware Supreme Court has reinforced that stockholders must strictly comply with the procedural “form and manner” requirements under 8 Del. C. § 220 when seeking to inspect corporate books and records. Failure to do so, including through failure to verify the final version of a demand or through bypassing the statutory five-business-day waiting period, can result in outright denial of inspection rights.
Background
Section 220 of the Delaware General Corporation Law provides stockholders with a qualified right to inspect a corporation’s books and records for any proper purpose, subject to procedural requirements. The statute mandates that a demand be made in writing under oath and that a stockholder wait five business days after the corporation receives the demand before applying to the Court of Chancery to compel inspection. In Floreani, stockholders of FloSports, Inc. (FloSports or the Company) submitted multiple demands for inspection that the Company, and then the Court of Chancery, rejected for failing to meet these procedural thresholds. The Delaware Supreme Court ultimately affirmed the Court of Chancery’s ruling.
Facts and Procedural History
FloSports’ stockholders made three inspection demands to access FloSports’ books and records because FloSports allegedly stopped holding stockholders’ meetings and failed to share financial information with its stockholders. FloSports denied the first demand for failing to meet Section 220’s procedural requirements because counsel sent it by email on behalf of an undisclosed “group of investors” and because the demand lacked a power of attorney, was not made under oath, and failed to include proof of stock ownership.
The second demand was challenged as not having been made “under oath” as required by Section 220(b), given that the supporting stockholder affidavits were signed approximately two weeks before counsel executed the final demand. After the denial of the second demand, the stockholders filed a Section 220 books-and-records action in the Court of Chancery.
While the case was pending, the stockholders submitted the third demand and also simultaneously moved to amend the complaint to reference it. FloSports challenged the third demand as a violation of the five-business-day waiting period because the stockholders filed their motion to amend before the expiration of the waiting period.
The Court of Chancery held that all three demands failed to satisfy the statute’s procedural requirements, notably overruling the magistrate’s finding that the third demand satisfied the five-day statutory period. On appeal, the Delaware Supreme Court affirmed, emphasizing that stockholders bear the burden of proving compliance with Section 220’s “form and manner” rules and that the statute’s plain language and purpose demand strict adherence.
Analysis
The Supreme Court’s decision reinforces that strict compliance with Section 220 is mandatory. Stockholders cannot invoke inspection rights under Section 220 without demonstrating procedural compliance. Specifically, verification of the final version of the demand is required, and prior execution of an affidavit will not suffice absent evidence that the stockholder actually reviewed the final version of the demand. Relatedly, the five-business-day waiting period is nonnegotiable. The statute’s waiting period provides a brief litigation-free window for a corporation to respond. Any application to the court relating to the demand before the expiration of five business days is impermissible, even if the stockholder believes the delay is harmless. Critically, the burden to demonstrate compliance with the statute’s requirements lands on the demanding stockholder(s).
For practitioners, this decision underscores the importance of carefully drafting, verifying, and timing Section 220 demands. Failure to comply can foreclose stockholder rights entirely, irrespective of the merits of their inspection request or proper purpose.
Conclusion
The Delaware Supreme Court’s opinion serves as a clear reminder that Section 220 is not merely a procedural formality but a carefully balanced statutory framework that protects both stockholder inspection rights and corporations from undue disruption. Stockholders and counsel must adhere to the statute’s procedural rules.