Also known as: books and records demand · books and records request · Section 220 demand
A shareholder's formal request to inspect a company's books and records, often used to gather evidence before filing a derivative or securities lawsuit.
A books and records demand is a written request from a shareholder to examine specified corporate documents, such as board minutes, financial statements, and related communications. For Delaware corporations, this right comes from Section 220 of the Delaware General Corporation Law (DGCL), which lets a stockholder inspect records if the demand states a "proper purpose," meaning a purpose reasonably related to their interest as a stockholder. Plaintiffs' attorneys commonly use these demands as a fact-finding tool: they inspect the records first, then use what they find to support a derivative suit or a securities class action. For a venture-backed startup, receiving one is often an early signal that a shareholder or investor is building a case against the board or officers. Responding takes real legal work, and some directors and officers (D&O) policies extend investigation-cost coverage to a books and records demand, so it is worth checking your policy and notifying your broker early.
Source: Delaware General Corporation Law § 220 (Delaware Code, Title 8)
A books and records demand is a written request by a shareholder to inspect a company's corporate records, such as board minutes, financial statements, and stockholder lists. For Delaware corporations, the right is granted by Section 220 of the Delaware General Corporation Law, which requires the stockholder to state a proper purpose reasonably related to their interest as a stockholder. Shareholders and their attorneys often use these demands to investigate suspected mismanagement or wrongdoing before deciding whether to sue.
Delaware courts encourage shareholders to use the tools at hand, including a Section 220 demand, to gather facts before filing a derivative suit. Inspecting records first helps a plaintiff build specific allegations and better survive an early motion to dismiss. That is why a books and records demand often precedes a derivative or securities class action rather than standing on its own.
It depends on your policy. Some directors and officers (D&O) policies extend coverage for investigation or inquiry costs, which can include the legal expense of responding to a books and records demand, while others do not respond until a formal claim is made. Because a demand is often a precursor to a lawsuit, notify your broker or carrier promptly and review your policy's definitions of claim and investigation costs.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.