In light of these recent decisions, what key issues should counsel consider before responding to a stockholder’s inspection demand that seeks to investigate corporate wrongdoing? Counsel should assess whether the stockholder can show: „„ credible basis from which to infer actionable wrongdoing. A „„ That documents beyond relevant portions of board minutes and other board materials, and corporate policies and procedures, are necessary and essential. „„ Good cause to invoke the Garner doctrine for accessing materials protected by the attorney-client privilege. As discussed above, even when there is a credible basis from which to infer wrongdoing, the proper purpose requirement is not satisfied if that wrongdoing cannot support potentially viable legal claims due to, for example, Section 102(b)(7) exculpatory clauses or the absence of cognizable damages. Although case law continues to evolve in this area, recent decisions provide a basis for a company to argue the viability of the claims to be investigated as a full defense against an inspection demand. If a stockholder has satisfied the proper purpose requirement, counsel should next consider the appropriate scope of inspection. As the Court of Chancery recognized before Wal-Mart, relevant board minutes and other board materials generally are sufficient to investigate wrongdoing by corporate fiduciaries. Although the court in Wal-Mart allowed access to a wide swath of documents, Oklahoma Firefighters reaffirmed that relevant board minutes and materials, and corporate policies and procedures, remain sufficient in most cases. Based on an analysis of these issues, a company may choose to reject an inspection demand outright or attempt to negotiate a reasonable scope of inspection.

When the parties are not able to reach a negotiated outcome, counsel should be mindful that the Court of Chancery has considerable discretion to fashion inspection orders based on the specific circumstances, and therefore an outcome cannot be predicted with certainty. Any response to an inspection demand should be made only after careful consideration of the facts and law, and in consultation with counsel experienced in these matters. The authors would like to thank Rebecca Jeffries of Harvard Law School, a former summer associate at Sullivan & Cromwell LLP, for her assistance in preparing these responses. THE SCENIC ROUTE IS ENJOYABLE BUT NOT IF YOU’RE PRESSED FOR TIME. Start with Practical Law. Take the most direct route with proven Practical Law resources. You can save time with up-to-date, straightforward how-to guides, annotated standard documents, checklists, timelines, and more. And now that we’re part of Thomson Reuters, you have everything you need from one trusted advisor. Begin your FREE TRIAL now at startwithpracticallaw.com © 2016 Thomson Reuters L-388223/3-14 Thomson Reuters and the Kinesis logo are trademarks of Thomson Reuters. © 2016 Thomson Reuters. All rights reserved.

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