Stockholders have a statutory right to access the books and records of the corporation. This power is an extremely important tool for stockholders to monitor the actions the board of directors and to root wrong-doing or malfeasance. However, the right to monitor a corporation's books and records is also subject to limitations.
Courts – as in Beam v. Stewart – regularly exhort plaintiffs to use § 220 to seek out books and records prior to filing derivative complaints. However, the § 220 process can be lengthy. Consequently, the economics of plaintiff litigation make it difficult for plaintiffs to both pursue § 220 litigation and also maintain control positions in early filed derivative litigation. This challenge makes § 220 actions a less than perfect vehicle for curbing the excesses of the litigation industrial complex.
The § 220 online course module will allow you to work through § 220 and the various judicial standards related to plaintiffs seeking access to book and records of the corporation.
This book, and all H2O books, are Creative Commons licensed for sharing and re-use. Material included from the American Legal Institute is reproduced with permission and is exempted from the open license.