In the fight to become the new home of incorporation for corporations, both Delaware and Texas recently amended their statutes governing corporations: the Delaware General Corporation Law[1] (“DGCL”) and the Texas Business Organizations Code[2] (“TBOC”), respectively. Both states recently amended their statutes to specifically narrow the scope of permissible “books and records” requests, with Texas narrowing the scope of such permissible requests even more than Delaware.[3]
These changes are particularly limiting for shareholders and investors and their counsel in Texas. But all is not lost. Those involved in Texas business disputes still have a potential fallback: Rule 202 of the Texas Rules of Civil Procedure.
The “Books and Records” Crackdown
Delaware
Prior to its 2025 revision, section 220 of the DGCL expressly provided that a corporation’s stock ledger and its list of stockholders were subject to inspection, concluding with a broad, catchall category: “other books and records.”[4] Stockholders used the catchall category to demand a broader scope of documents and communications in their pre-litigation inspection requests.[5] Books and records demands could be wide-ranging and expansive, allowing them to be used as an alternative to post-complaint discovery in suits against businesses.[6] In recent years, books and records demands had reached such a volume that the Delaware Court of Chancery assigned magistrate judges to adjudicate an increasing number of the requests.[7]
In March of this year, Delaware enacted significant amendments to DGCL section 220, which overhauled stockholder inspection rights to a company’s books and records.[8] The amendments now narrowly define the “books and records” that stockholders may inspect and impose additional procedural hurdles.[9] In essence, only formal corporate documents may be inspected by stockholders pursuant to a books and records request.[10] Informal communications like internal emails, text messages, and similar electronic correspondence are omitted from the statutory list.[11] Absent extraordinary circumstances, stockholders can no longer demand broad collections of officers’ or directors’ emails or chats as “books and records” under Delaware law.[12]
This is a sharp contraction from prior Delaware court decisions that had allowed inspections of emails when formal documents were insufficient.[13] These changes to DGCL section 220 aim to curb the expansive use of section 220 that Delaware courts had come to tolerate, therein reducing the burden on companies from broad pre-suit discovery requests.[14]
Texas
Like Delaware, Texas, prior to its 2025 revision, had allowed for broader inspection of “books and records.” Following Delaware, Texas wanted to incentivize more businesses to incorporate or reincorporate to Texas, so it quickly followed suit by passing Senate Bill 29, which, among other things, limits what constitutes a “record,” who can inspect it, and when it can be inspected.[15] Similar to Delaware’s amendment for books and records, the new law now categorically excludes emails, texts, and social media communications unless they formally effectuate corporate action.[16]
A critical difference is that Texas blocks the use of books and records demands as a pre-litigation discovery device if litigation is expected, whereas Delaware still permits pre-suit inspections as a valuable stockholder right, subject to the new narrowed scope and heightened proof requirements.[17] TBOC section 21.218(b-2) curtails the ability of shareholders to use inspection rights when a lawsuit is on the horizon. Under this provision (applicable to corporations with publicly traded stock, or any corporation that opts in), a shareholder’s demand “shall not be for a proper purpose” if the corporation reasonably determines that the demand is connected to certain litigation proceedings.[18]
Specifically, if the request is made in connection with (1) an active or pending derivative proceeding on behalf of the corporation (whether already filed or “expected to be instituted or maintained” by the demanding shareholder) or (2) an active or pending nonderivative civil lawsuit in which the demanding shareholder (or its affiliate) and the corporation are adversarial parties, then the corporation can refuse inspection on the ground that no proper purpose exists.[19] In essence, Texas has declared that a shareholder cannot use a books and records demand as a substitute for discovery in ongoing or imminent litigation—those matters must proceed through the normal litigation discovery process.[20] This codifies a strict rule that if a shareholder is already suing (or preparing to sue) the company, inspection rights are suspended as to that subject matter.[21]
Comparison of Delaware and Texas
In summary, Delaware and Texas have both limited books and records requests to protect corporations from onerous fishing expeditions. Delaware’s approach seeks to maintain the balance between stockholder rights and protection of corporations by giving its chancery court some discretion in exceptional cases, whereas Texas’s approach is more categorical and restrictive (especially with the litigation bar and ownership thresholds). Delaware still affords stockholders a (constrained) investigative tool as a prelude to litigation, whereas Texas has largely confined stockholders to formal disclosures and traditional discovery once a suit is filed.
Texas Rule 202 as an Alternative
However, Texas shareholders and their counsel, compared to their Delaware counterparts, may not be as limited by the changes to the “books and records” section of the TBOC as one might think. In fact, the Texas Rules of Civil Procedure provide another path for stockholders and investors to police businesses and management—even more expansively than Delaware.
Texas offers one of the most permissive pre-suit discovery mechanisms in the country through Texas Rule of Civil Procedure 202 (“Rule 202”), enabling litigants to seek depositions and evidence before filing suit—an option rarely available in other states. In Texas, Rule 202 allows for pre-suit depositions along with the potential to compel some document production relevant to the investigation.[22] Because the rule allows a person to petition a court for authorization to take a deposition before a lawsuit is filed, it may become a significantly more valuable tool for Texas shareholders and their counsel in light of the 2025 amendments to the TBOC that restrict shareholder access to corporate books and records.
Under Rule 202, a person may petition a court for an order authorizing the taking of a deposition (1) to perpetuate testimony for use in an anticipated lawsuit or (2) to investigate a potential claim or suit to determine whether a claim exists and against whom it should be brought.[23] The petitioner must show that (1) allowing the deposition may prevent a failure or delay of justice and (2) the petition is not filed for harassment or improper purpose.[24] In addition, Rule 202 depositions may include document requests, and some courts have allowed a limited form of pre-suit discovery as part of the deposition process, which may include emails, texts, and other informal documents not authorized under the new TBOC section 21.218.[25]
Stockholders historically used TBOC section 21.218 to inspect corporate records before filing derivative lawsuits to obtain board minutes, internal communications, or other evidence supporting a claim. Now, shareholders are prohibited from using section 21.218 if a suit is anticipated, and their access to substantive materials is drastically narrowed.[26] Rule 202 provides a potential work-around: (1) it is not based on ownership thresholds; (2) it does not depend on the definition of books and records under the TBOC; (3) it can be used to depose directors, officers, and employees; and (4) it may be used to compel document production relevant to the investigation. As a result, a shareholder may use Rule 202 to investigate a claim that they may now be barred from investigating under section 21.218. Corporate counsel should be aware that Rule 202 may now function as the new “books and records” tool in Texas, albeit subject to judicial gatekeeping.
Conclusion
When discussing their proposed changes, both the Delaware and the Texas legislatures cited the need for more business- and management-friendly laws and a reform of books and records requests.[27] With this goal in mind, both states narrowed the scope of permissible books and records requests. In its zeal to be business- and management-friendly, Texas instituted revisions that not only narrowed the scope during litigation but also narrowed the scope pre-suit.
Nonetheless, those involved in Texas business disputes are not without options. As shareholder litigation strategy adapts to new statutory limitations, Rule 202 may increasingly function as the primary mechanism for pre-suit factual development in Texas in business and shareholder disputes. Though courts retain discretion and impose equitable limitations to prevent harassment or fishing expeditions, Rule 202’s flexibility and broader evidentiary reach, including access to informal communications, render it a more expansive and potentially powerful tool than the narrowed inspection rights codified in the new TBOC.
Del. Code Ann. tit. 8 (2025). ↑
Tex. Bus. Orgs. Code Ann. (2025); S. 29, 89th Leg., Reg. Sess. (Tex. 2025). ↑
Tex. Bus. Orgs. Code Ann.; S. 29; Del. Code Ann. tit. 8, § 220 (Supp. 2025). ↑
Del. Code Ann. tit. 8, § 220 (2024). ↑
Sean C. Knowles & Joseph E. Bringman, Delaware Significantly Narrows the Scope of Stockholder Inspection of Corporate Books and Records, Perkins Coie (Apr. 5, 2025); Del. Code. Ann. tit. 8, § 220 (2024). ↑
See, e.g., KT4 Partners LLC v. Palantir Techs., Inc., 203 A.3d 738, 742 (Del. 2019) (“[I]f a company observes traditional formalities, such as documenting its actions through board minutes, resolutions, and official letters, it will likely be able to satisfy a § 220 petitioner’s needs solely by producing those books and records. But if a company instead decides to conduct formal corporate business largely through informal electronic communications, it cannot use its own choice of medium to keep shareholders in the dark about the substantive information to which § 220 entitles them.”); Hightower v. SharpSpring, Inc., No. 2021-0720-KSJM, 2022 Del. Ch. LEXIS 214 (Del. Ch. Aug. 31, 2022); Nvidia Corp. v. City of Westland Police & Fire Ret. Sys., 282 A.3d 1 (Del. 2022); Nodana Petroleum Corp. v. State ex rel. Brennan, 123 A.2d 243, 246–47 (Del. 1956). ↑
Lauren N. Rosenello & Marius Sander, Books and Records Demands 2023 Recap: Courts Continue to Develop the Law Regarding the Scope of Inspection, Skadden (Dec. 2023); Scott A. Barshay & Andre G. Bouchard, Transformative Amendments Proposed to Delaware General Corporation Law, Paul Weiss (Feb. 25, 2025). ↑
Del. Code. Ann. tit. 8, § 220 (2025). ↑
Id. ↑
Id. ↑
Id. ↑
Id. ↑
Highland Select Equity Fund, L.P. v. Motient Corp., 906 A.2d 156, 163–64 (Del. Ch. 2006); KT4 Partners LLC v. Palantir Techs., Inc., 203 A.3d 738, 742 (Del. 2019). ↑
See Barshay & Bouchard, supra note 7. ↑
Tex. Bus. Orgs. Code Ann. (2025); S. 29, 89th Leg., Reg. Sess. (Tex. 2025). ↑
Tex. Bus. Orgs. Code Ann. § 21.218(b); S. 29. ↑
Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑
Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑
Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑
Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑
Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑
Tex. R. Civ. P. 202. ↑
Id. r. 202.1. ↑
Id. r. 202.4(a). ↑
See In re Anand, No. 01-12-01106, 2013 Tex. App. LEXIS 4157, 2013 WL 1316436, at *3 (Tex. App.–Houston (1st Dist.) Apr. 2, 2013) (orig. proceeding) (“Nothing in the language of Rule 202 prohibits a petitioner from requesting that documents be produced along with the deposition.”); see also In re Akzo Nobel Chem., Inc., 24 S.W.3d 919, 921 (Tex. App.–Beaumont 2000) (orig. proceeding) (“Neither by its language nor by implication can we construe Rule 202 to authorize a trial court, before suit is filed, to order any form of discovery but deposition.”). ↑
Tex. Bus. Orgs. Code Ann. § 21.218. ↑
See Barshay & Bouchard, supra note 7; Texas Governor Signs New Business-Friendly Governance Law to Promote In-State Corporate Growth: Senate Bill 29 Analysis, Katten (May 14, 2025); David G. Cabreles et al., Passage of Senate Bill 29 Positions Texas as a Leading State for Incorporations, Foley (May 7, 2025). ↑
