The Business Litigation Blog

Cancellation of shares through merger deprives stockholder of standing under Section 220 to inspect books and records

In August 2016, Monster entered into a merger agreement with Randstad in which Randstad would acquire Monster stock in a tender offer through a subsidiary. The tender offer expired on October 28, 2016 and, on November 1, 2016, any remaining stock was canceled and converted to cash. On October 19, 2016, the plaintiff issued a Section 220 inspection demand. Monster denied the request. After the merger, plaintiff filed suit to compel the inspection. The Chancery Court dismissed based on the text of Section 220, which allows a stockholder to inspect books and records of the corporation in certain circumstances. Under Section 220, the plaintiff must establish that he is a stockholder. Since the plaintiff was not a stockholder at the time of filing – even though he was at the time of his demand – he lacked standing to pursue a claim under Section 220.

Weingarten v. Monster Worldwide, Inc., C.A. No. 12931-VCG (Del. Ch. Feb. 27, 2017)

 

Post a comment

Comments closed

 
Real Time Web Analytics