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Court of Chancery Explains What is A Credible Basis to Inspect

Southeastern Pennsylvania Transportation Authority v. Abbvie Inc., C.A. 10374-VCG (April 15, 2015)

It is too often thought that just by alleging some wrongdoing a demand for inspection of records is sufficient. Well, this decision explains why that is wrong. The demand must state a credible basis to believe that as a result of the inspection nonexculpated conduct will be uncovered and suit filed. That is hard to do when there is a 102(b)(7) provision in the certificate of incorporation and no real breach of loyalty claim.

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blog, complex commercial litigation, corporate counseling & litigation