## Facts

- Hatleigh Corporation owned about 15.3% of Lane Bryant’s outstanding common stock (1,000 shares of record plus approximately 697,300 shares beneficially).
- After an earlier § 220 action (August 1980) denied inspection because Hatleigh’s demand did not state an intent to solicit proxies, Hatleigh later negotiated with Lane Bryant regarding board representation; negotiations failed.
- On November 5, 1980, Hatleigh’s board resolved to solicit proxies for the next annual meeting and to seek representation on Lane Bryant’s board.
- That same day, Hatleigh made a written demand under oath under 8 Del. C. § 220 to inspect and copy Lane Bryant’s stockholder list.
- The demand stated purposes including communicating with stockholders, influencing management policy, assessing support for Hatleigh’s efforts to obtain board representation, and soliciting proxies for election of directors.
- Hatleigh also requested a detailed “CEDE & Co.” breakdown to identify beneficial owners behind the Depository Trust Company nominee.
- Lane Bryant refused the demand despite conceding technical compliance with § 220 and acknowledging that proxy solicitation is generally a proper purpose.
- Lane Bryant argued the proxy-solicitation purpose was pretextual, the request was premature because no meeting was scheduled, and the CEDE breakdown exceeded § 220’s required scope.

## Issues

1. Whether Hatleigh’s stated intent to communicate with stockholders and solicit proxies was a bona fide “proper purpose” under 8 Del. C. § 220.
2. Whether a § 220 demand for a stockholder list is premature absent a noticed or imminent stockholder meeting.
3. Whether § 220 required production of information beyond the record-holder list, including a CEDE & Co. breakdown identifying beneficial owners necessary for effective proxy solicitation.

## Decision

- The Court of Chancery entered judgment for Hatleigh and ordered Lane Bryant to permit inspection and copying of the requested stockholder materials.
- The court found Hatleigh’s proxy-solicitation and stockholder-communication purpose was proper and bona fide at the time of the demand.
- The court rejected Lane Bryant’s “prematurity” defense, holding § 220 does not condition list inspection on a scheduled or imminent meeting.
- The court ordered production of the stockholder list and the CEDE breakdown because the additional information was necessary to make the inspection right effective for Hatleigh’s stated purpose.

## Legal Principles

- Under 8 Del. C. § 220, proxy solicitation and communication with fellow stockholders about corporate governance and director elections are proper purposes when reasonably related to the requester’s stockholder interests.
- When a stockholder seeks a stockholder list and satisfies § 220’s formal requirements, the corporation bears the burden to prove the inspection is sought for an improper purpose; suspicion based on timing alone is insufficient.
- A stockholder-list demand is not improper or premature solely because no meeting has been noticed; preparation for proxy activity may reasonably precede a meeting date.
- The scope of § 220 inspection includes information reasonably necessary to accomplish the proper purpose; where shares are held in street name, this may include a CEDE & Co. breakdown to identify and contact beneficial owners.

## Conclusion

The Court of Chancery enforced Hatleigh’s § 220 rights, holding that a substantial stockholder acting in good faith to solicit proxies may obtain not only the record stockholder list but also the CEDE breakdown needed to reach beneficial owners, and that such a demand need not await a scheduled meeting.


Hatleigh Corp. v. Lane Bryant, Inc., 428 A.2d 350 (Del. Ch. 1981)