Protecting the Keys to the Magic Kingdom: Shareholders' Rights of Inspection and Disclosure in Light of Disney
2005; Volume: 30; Issue: 4 Linguagem: Inglês
ISSN
0360-795X
Autores Tópico(s)Taxation and Legal Issues
ResumoI. INTRODUCTION [I]nformation is like any other valuable resource, [m]ore information is beneficial, but information is costly to produce. At some point, the costs of generating more information fall short of the benefits of having more information. ' The costs associated with information come not only from how the information is produced or obtained, but how it is ultimately put to use. Shareholders in Delaware corporations have long had the right to inspect the corporate books and records of the corporations in which they hold stock.2 This right of inspection has been one of the only ways for shareholders to effectively monitor their financial investment.3 However, some shareholders now seek to go one step further and publicly disclose the information that they obtain pursuant to their statutory right of inspection. This desire to disclose presents an issue of first impression for the Delaware courts: how to give meaning to the shareholder's ability to monitor his or her investment through inspection while protecting the information obtained from disclosure to the public.4 This Note examines that issue in light of Disney v. Walt Disney Co.5 and the policies that underlie a shareholder's statutory right of inspection. To provide an adequate backdrop for analysis of the problems associated with disclosure, Part II.A begins with a discussion of the facts and circumstances surrounding the Disney litigation. An understanding of these facts is necessary to appreciate the unique opportunities and dangers that are posed by disclosure in the corporate context. Part II.B examines the policy choices made by the Delaware legislature in codifying the right of inspection by examining the statutory language of section 220 of the Delaware General Corporation Law. These policy choices are placed in context by comparing the Delaware statutory scheme to the California inspection statute and the Revised Model Business Corporation Act. Finally, Part II.C discusses the judicial interpretation of section 220 and how the Delaware courts have given meaning to the statutory language by applying a balancing test to the right of inspection that weighs the interests of the shareholder against those of the corporation. In light of the backdrop established by the discussion of the statutory language and the judicial interpretation of that language, Part III.A.1 analyzes the interests that are involved in the corporate entity and how those interests may diverge even in the ideal corporate setting. Part III.A.2 discusses those same interests in light of the realities of corporate society by discussing the problems of trust and opportunism that are present in the corporate context. Part III.B contains an analysis of the types of situations in which disclosure of non-public information obtained pursuant to a section 220 petition would be warranted and how disclosure in each of those contexts would affect the balance demanded by section 220. Part III.C discusses how the current mechanisms that are in place to protect that balance are inadequate to deal with situations where disclosure is either warranted or necessary. In conclusion, Part IV discusses the potential solutions to the problems that are associated with disclosure and how the Delaware courts must establish a new framework for analyzing the interests at stake when disclosure is necessary and how to adequately protect the interests of both the shareholder and corporation in that context. II. BACKGROUND A. Who's the Leader of this Club? The Disney litigation began in 2003 when Roy Disney, nephew of founder Walt Disney, and his good friend and investment manager, Stanley Gold, resigned their respective seats on the Disney Company's (Disney) Board of Directors (Board).6 Prior to his resignation, Roy Disney was the long-serving Vice Chairman of the Disney Board of Directors and the Chairman of the Disney Feature Animation Division.7 In their respective letters of resignation, Mr. …
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