By: Salvatore Saltarelli
The Delaware Supreme Court’s recent decision in Paramount Global v. Rhode Island Office of the General Treasurer ex rel. Employees’ Retirement System of Rhode Island[1] offers a sharp lens into two enduring tensions in corporate law: the risks posed by indirect control structures and the evidentiary thresholds governing books-and-records demands under Section 220 of the Delaware General Corporation Law.[2]
At the center of the dispute is Shari Redstone, who indirectly controlled Paramount Global through her ownership of National Amusements Inc.[3] This layered control structure proved decisive. As the court recounts, Redstone explored a potential sale of National Amusements—effectively a sale of control over Paramount—while reports suggested she may have resisted or redirected bids for Paramount itself.[4]
This dynamic raises a classic fiduciary dilemma. A controlling stockholder owes duties of loyalty to the corporation and its minority shareholders.[5] Yet here, Redstone’s incentives as the owner of National Amusements may have diverged from those of Paramount’s public investors. Selling the parent entity, National Amusements, at a premium could generate larger benefits for its controller, Redstone, and for other shareholders of the parent entity, even if a full-company sale of Paramount might have yielded greater value for its shareholders. The Delaware Court of Chancery found a “credible basis” to suspect precisely this kind of conflict—namely, that corporate opportunities may have been diverted from Paramount to its controller.[6] This is the corporate wrongdoing the investigation of which constitutes a proper purpose for a Section 220 books and records inspection request. The litigation originated when a Paramount institutional shareholder, a Rhode Island pension fund, asked to access Paramount’s books and records to investigate the dynamics of the selling process.[7] At trial, the pension fund sought to introduce news reports that were published after its demand was served and that would serve as additional evidence to support a credible inference of wrongdoing at Paramount.[8]
The Court rejected a bright-line rule limiting Section 220 plaintiffs to evidence available at the time of their demand. Instead, it endorsed a flexible, case-by-case approach: post-demand evidence may be considered, in the exercise of the court’s sound discretion and under exceptional circumstances, when it is material and non-prejudicial.[9]
This is a meaningful doctrinal development. By allowing post-demand developments (including later news reports and SEC filings) to inform that inquiry, the Court effectively acknowledges the dynamic nature of modern corporate transactions. Deals evolve quickly, and information asymmetries are acute. A rigid temporal cutoff would risk excluding the very evidence that clarifies whether fiduciary misconduct occurred. Equally notable is the Court’s treatment of hearsay in financial journalism. The Court upheld the Chancery Court’s reliance on reporting from reputable outlets, even when based on anonymous sources, which emphasized a contextual reliability analysis.[10]
When control is exercised indirectly, the potential for misaligned incentives intensifies. Section 220 litigation becomes a critical tool for minority shareholders to probe those tensions. The Delaware Supreme Court’s decision ensures that this tool remains adaptable, even as the corporate landscape grows more complex.
The dissent raises a serious concern regarding the newly adopted rule on post-demand evidence in books-and-records litigation.[11] Flexibility may incentivize premature or speculative demands, burdening courts and corporations alike. The majority acknowledges this risk but places its faith in judicial discretion to police abuse.
The Delaware Supreme Court’s ruling is not likely to resuscitate the “fishing expeditions” that the Delaware judiciary has never endorsed, especially now that the post-SB-21 section 220 requires plaintiff shareholders to describe “with reasonable particularity the stockholder’s purpose.”[12] Stockholder plaintiffs might be able to rely on post-demand evidence, but they will still need to identify the corporate wrongdoing they intend to investigate in such detail as is required by the new statute.
[1] Paramount Glob. v. R.I. Off. of Gen. Treasurer ex rel. Emps.’ Ret. Sys. of R.I., No. 129, 2025, 2026 WL 820647, at *1, *9 (Del. Mar. 25, 2026).
[2] 8 Del. Code § 220 (2025).
[3] Paramount Glob., 2026 WL 820647, at *1.
[4] Id.
[5] See Ivanhoe Partners v. Newmont Mining Corp., 535 A.2d 1334, 1344 (Del. 1987) (“Under Delaware law a shareholder owes a fiduciary duty only if it owns a majority interest in or exercises control over the business affairs of the corporation.”); Sterling v. Mayflower Hotel Corp., 93 A.2d 107, 109–10 (Del. 1952) (“Plaintiffs invoke the settled rule of law that Hilton as majority stockholder of Mayflower and the Hilton directors as its nominees occupy, in relation to the minority, a fiduciary position in dealing with Mayflower’s property.”); Weinberger v. UOP, Inc., 457 A.2d 701, 710 (Del. 1983) (citing Guth v. Loft, Inc., 5 A.2d 503, 510 (Del. 1939) (holding that a controlling or dominating shareholder standing on both sides of a transaction, as in a parent-subsidiary context, bears the burden of proving its entire fairness).
[6] Paramount Glob., 2026 WL 820647, at *1.
[7] Paramount Glob. v. R.I. Off. of Gen. Treasurer ex rel. Emps.’ Ret. Sys. of R.I., No. 129, 2025, 2026 WL 820647, at *1, *1 (Del. Mar. 25, 2026).
[8] See id.
[9] See id. at *9.
[10] Id. at *10.
[11] Id. at *11–12.
[12] See id. at *9; 8 Del. Code § 220(b)(2)(b)(2025).
