A Reconsideration of the Shareholders’ Right to Inspect Books and Records: Focusing on Case Law and Legislative Developments in Delaware, U.S.A.

This paper aims to re-examine the legal nature and function of the shareholder’s right to inspect books and records under the Korean Commercial Act, and to explore directions for improving the Korean Commercial Act through a comparative analysis of the recent amendments to Section 220 of the Delaware General Corporation Law (DGCL). The shareholder's right to information access functions as a core mechanism for ensuring corporate governance transparency and management accountability, extending beyond a mere personal right to know. Specifically, the inspection right substantially enables shareholder protection by securing necessary evidence in the preliminary stage of exercising other shareholder rights such as derivative suits, injunctions against unlawful acts, and removal of directors. However, Article 466 of the current Korean Commercial Act significantly restricts the effectiveness of this mechanism by limiting the inspection body to shareholders holding 3% or more of the total issued shares, abstractly defining the subjects of inspection as merely "books and records of account", and stipulating only a vague requirement of a "written statement with reasons". In contrast, Delaware has developed the shareholder inspection right through extensive case law, strengthening the shareholder's oversight function under a low burden of proof called "credible basis." Furthermore, the scope of discoverable documents has expanded beyond traditional accounting books to include board minutes, internal reports, emails, and subsidiary documents, with courts viewing the right as a pre-suit discovery device. Yet this judicial expansion imposed excessive document-production burdens and confidentiality risks, prompting several corporations to reincorporate elsewhere. Consequently, Delaware enacted Senate Bill No. 21 (SB 21) in March 2025, substantially revising DGCL § 220. The main points of the 2025 revision are summarized as: ① Codification of 9 specific categories of inspectable books and records; ② Principal denial of access to emails and informal documents; ③ Introduction of high proof standards ("compelling need" and "clear and convincing evidence") for exceptional additional inspection; ④ Codification of procedural requirements (proper purpose, specific particularity, and material relevance); and ⑤ Institutionalization of corporate confidentiality protection mechanisms. This is evaluated as a legislative adjustment that institutionally strengthens corporate defense rights and confidentiality protection while somewhat restricting the scope of the inspection right expanded by case law. Based on this comparative analysis, the improvement measures for the Korean legal system are as follows: First, the shareholder threshold should be relaxed to 1%, consistent with the requirement for derivative suits, to ensure congruence. Second, the Multiple Inspection Right (allowing a parent company's shareholder to access a subsidiary's books) should be introduced to complement the effectiveness of multiple derivative suits. Third, procedural predictability should be enhanced by legislating the requirements for a "specific reason" and "material relevance between the reason and the documents," and the clarity should be increased by codifying a "proper purpose" or enumerating grounds for corporate refusal. Fourth, institutionalizing specific protection mechanisms (e.g., confidentiality orders, redaction, conditional inspection) is necessary to balance the shareholder's right to information access with the protection of the company's trade secrets. Ultimately, the inspection right is a system that seeks a balance between the protection of shareholder interests and the legitimate interests of the corporation. The recent changes in Delaware law demonstrate that this balance is not fixed but can be readjusted according to contemporary circumstances. At this juncture, the discussion for improving the Korean Commercial Act must move towards a direction that substantially strengthens shareholder rights while simultaneously implementing mechanisms for abuse prevention and confidentiality protection.