On March 25, 2026, the Delaware Supreme Court issued a significant and closely divided opinion in Paramount Global v. State of Rhode Island Office of the General Treasurer,[1] addressing two unsettled questions in stockholder books-and-records litigation under Section 220 of the Delaware General Corporation Law (DGCL).[2] By a 3–2 vote, the court affirmed the Court of Chancery’s ruling that post-demand evidence may, under appropriate circumstances, be used to establish the “proper purpose” required for a stockholder inspection demand. Further, the Court held that reports in reputable publications citing anonymous sources can constitute sufficiently reliable evidence of a credible basis to suspect corporate wrongdoing, and thus support a “proper purpose” for inspection. As one of the first Delaware Supreme Court decisions following the 2025 amendments to Section 220, Paramount Global will have lasting practical significance for stockholders, corporations, and practitioners navigating inspection demand proceedings.
I. Background: The Paramount Sale Process and the Inspection Demand
The dispute arose from Shari Redstone’s control of Paramount Global through National Amusements, Inc. (“NAI”), which owned a supermajority of Paramount’s voting Class A shares. Beginning in 2023, financial pressures on NAI, including a dividend cut by Paramount’s board and NAI’s difficulty servicing its debt, prompted a flurry of media reporting about whether Redstone would sell NAI’s controlling interest in Paramount potentially in lieu of seeking a sale of the company as a whole.
Over the course of roughly a year, outlets including the Wall Street Journal, the New York Times, Bloomberg Law, the Financial Times, the New York Post, and Variety published dozens of articles—citing confidential sources described as people “familiar with the situation,” “close to the negotiations,” or “briefed on the matter”—reporting that Redstone had fielded acquisition proposals from Amazon, Apple, Netflix, Skydance Media, Apollo Global Management, and others. The articles suggested that Redstone, in her capacity as Paramount’s controlling stockholder, was steering potential buyers toward acquiring NAI’s controlling block rather than the company as a whole—and in some instances appeared to be blocking whole-company sale opportunities in favor of transactions that would benefit her personally.
On April 5, 2024, the Employees’ Retirement System of Rhode Island (“Rhode Island”), a holder of Paramount Class B common stock, served a Section 220 demand on Paramount. The demand alleged that it had a credible basis to suspect that Redstone and NAI had “usurp[ed] Paramount’s corporate opportunity by marketing National Amusements to buyers who otherwise would be interested in Paramount or its assets,” and that the Paramount board had “done nothing to ensure that Redstone is not diverting corporate opportunities or interfering with Paramount’s ability to seek the best deal for Paramount and its other stockholders.” The demand sought board materials, communications concerning proposed transactions, the special committee’s mandate, and informal electronic communications of Redstone and her advisors.
Paramount rejected the demand. Rhode Island filed a complaint in the Court of Chancery on April 30, 2024. During the pendency of the proceeding, additional media reporting and Paramount SEC filings continued to corroborate and amplify the earlier accounts, culminating in the announcement of the Skydance transaction—which closed on August 7, 2025—under which Skydance acquired NAI for $2.4 billion and then merged with Paramount.
II. The Proceedings Below: The Magistrate and the Vice Chancellor Diverge
The case was tried on a paper record before a Magistrate in Chancery in July 2024. Rhode Island relied on pre-demand news reporting as well as post-demand articles and SEC filings that corroborated the earlier accounts. The Magistrate, however, declined to consider the post-demand evidence, holding that the stockholder could only rely on information that existed when the demand was served. Applying that limitation, the Magistrate found no credible basis to suspect wrongdoing and recommended judgment for Paramount.
Rhode Island disputed the Magistrate’s recommendation, and the Vice Chancellor conducted a de novo review of both the facts and the law. The Vice Chancellor declined to adopt the Magistrate’s recommendation. He held that “there are settings when a stockholder can legitimately rely at trial on post-demand evidence”—specifically, when a material event occurs after the demand but before trial and the stockholder’s reliance on such evidence does not prejudice the corporation.[3] He also held that “articles from reputable publications that rely on anonymous sources will generally be sufficiently reliable for a court to consider when assessing” whether a proper purpose exists.[4] On that basis, the Vice Chancellor found that Rhode Island had demonstrated by a preponderance of the evidence a credible basis to infer that Redstone and NAI had breached the duty of loyalty by channeling potential buyers away from a company-level transaction and into an NAI-level transaction, and ordered the matter remanded to the Magistrate to determine the scope of production. Paramount sought and obtained certification for interlocutory appeal.
III. The Delaware Supreme Court’s Decision: Two Key Holdings
A. Post-Demand Evidence: A Discretionary Standard, Not a Categorical Bar
The central legal question before the Supreme Court was whether a Court of Chancery, when determining whether a stockholder has shown a “credible basis” to suspect wrongdoing, may consider evidence concerning events that are disclosed or occur after the stockholder has served its Section 220 demand.
Paramount argued for a categorical rule: any evidence postdating the demand should be inadmissible for purposes of establishing a proper purpose—by either side. It grounded this argument in the text of Section 220(c), which requires a stockholder to “first establish” a proper purpose, and in Court of Chancery transcript rulings that it read as supporting a time-of-demand limitation. It also raised policy concerns, warning that permitting post-demand evidence would “invite[] stockholders to use the Section 220 demand process to keep corporate books and records open in perpetuity as long as some rumors about the corporation circulate in the news.”
The Supreme Court’s majority, written by Justice Traynor and joined by Justices LeGrow and Griffiths, rejected Paramount’s categorical approach. The court concluded that “[w]e discern nothing in [§] 220’s text that prohibits the consideration of post-demand evidence; on the contrary, we see the same signposts identified by the Court of Chancery, all of which point in the direction of admissibility under appropriate circumstances.”[5] The majority noted that Section 220(c)’s “first establish” language describes what a stockholder must demonstrate to the court after the corporation has rejected a demand, a showing that necessarily occurs well after the demand itself, and thus does not constrain what evidence is admissible at that later proceeding.
The majority determined that the rulings on which Paramount relied did not support a categorical bar. Instead, the courts had declined to consider post-demand evidence for reasons unrelated to timing, such as preventing stockholders from using discovery in a books and records case to obtain the very documents at issue in the proceeding. The majority likewise noted that the Delaware Supreme Court itself had previously relied on post-demand evidence in Wong Leung Revocable Trust v. Amazon.com, Inc., 345 A.3d 965 (Del. 2025), where it credited a federal antitrust court ruling published after the demand was made.
Having rejected a bright-line rule, the court endorsed the standard articulated by the Vice Chancellor: the general rule is that a stockholder is limited to evidence identified in the demand and information available when the demand was served, but under appropriate circumstances the Court of Chancery may, in its sound discretion, consider post-demand evidence that is material to the credible-basis inquiry and not prejudicial to the corporation.[6] On the facts presented—where the post-demand evidence concerned the company’s own public conduct, the parties had stipulated to the admissibility of certain such evidence, and Paramount itself had introduced post-demand evidence—the majority saw no abuse of discretion in the Vice Chancellor’s consideration of that evidence.[7]
B. Confidentially Sourced News Reporting: A Reliable Basis for Credible Suspicion
The majority and dissent were in agreement on the second issue. Both accepted the proposition that hearsay statements in news articles attributed to unnamed, confidential sources may, if sufficiently reliable, support a “credible basis” finding under Section 220.
This was consistent with prior precedent. The Supreme Court had previously stated in NVIDIA Corporation v. City of Westland Police and Fire Retirement System that in the § 220 context, the use of ‘sufficiently reliable hearsay’ is allowed.[8] The “credible basis” standard itself has been described as the “lowest possible burden of proof”—satisfied by “a credible showing, through documents, logic, testimony or otherwise, that there are legitimate issues of wrongdoing.”[9]
Paramount challenged the Vice Chancellor’s statement that “[n]ews articles from reputable publications that rely on anonymous sources will generally be sufficiently reliable for a court to consider when assessing whether a stockholder has a credible basis to suspect wrongdoing” as creating an impermissible categorical shortcut.[10] Reading the Vice Chancellor’s opinion as a whole, the majority was satisfied that the court had not relied on outlet reputation as a conclusive proxy for reliability. Rather, the Vice Chancellor properly conducted a multi-factor analysis considering: the volume of articles (47); the level of specificity in the source descriptions; instances where Paramount’s own SEC filings corroborated the reporting; the reputation of both the outlets and the specific journalists; the absence of indicators of unreliability or conspiratorial character; and the fact that Paramount itself had relied on articles with similar characteristics. The majority found this reliability analysis “passes muster.”[11]
IV. The Dissent: A Categorical Rule Is the Better Policy
Chief Justice Seitz and Justice Valihura agreed with the majority’s conclusion on the confidential source issue but dissented on post-demand evidence. The dissenters acknowledged the majority’s practical observation—that a stockholder denied the use of post-demand evidence at trial can simply serve a new demand, as Rhode Island did here—but concluded that the better policy choice is a categorical bar.[12]
The dissent advanced several structural and policy arguments in support of a bright-line rule. First, the dissenters noted that Section 220(c)’s five-day waiting period—which gives the corporation a brief litigation-free window to consider the demand before suit may be filed—would be undermined if stockholders can supplement their demands with post-filing evidence: a stockholder could serve a thinly supported demand, race to the courthouse, and then rely on subsequently developed evidence to establish a proper purpose that did not exist at the time of the demand.
Second, the dissenters took issue with the practical workability of the majority’s “material event” exception, arguing that “[l]itigation over what events are ‘material’ will add one more layer of complexity to what should be a summary proceeding.”[13] Section 220 proceedings are designed to be prompt and narrow. The dissenters worried that the majority’s discretionary approach would make them more complex and time-consuming.
Finally, the dissenters observed that confining the stockholder to evidence available at the time of the demand is not unworkable—it simply incentivizes stockholders to bring inspection demands only when they have a concrete, contemporaneous basis for suspicion, rather than serving speculative demands in hopes that supporting evidence will emerge before trial.
V. Key Takeaways for Practitioners
The decision provides clarity on two key questions in Section 220 practice and has immediate practical implications for both sides of books-and-records disputes.
For stockholder plaintiffs, the ruling confirms that post-demand events and disclosures are not categorically off-limits in a Section 220 proceeding. Where material developments occur after the demand is served, whether through SEC filings, additional media reports, or other public disclosures, and where reliance on that evidence would not prejudice the corporation, courts have discretion to consider it. Plaintiffs should preserve and introduce such evidence and be prepared to demonstrate both materiality and non-prejudice.
For corporations, the decision underscores that post-demand evidence is admissible as a discretionary matter, not as a matter of right. The Court of Chancery retains discretion to exclude post-demand evidence—as the Magistrate did in this very case—where, for example, the demand is premature or the evidence would prejudice the corporation. The majority’s affirmance rested heavily on the facts that the post-demand evidence here consisted of publicly available disclosures about the company’s own conduct, that Paramount had stipulated to some of it, and that Paramount itself had proffered similar evidence.
On the anonymous source question, the unanimous agreement across the majority and dissent is itself significant: reporting by reputable news organizations citing anonymous sources close to corporate negotiations can be sufficient to meet the “credible basis” threshold, provided the court conducts a fact-specific reliability analysis of the kind the Vice Chancellor performed here. Parties relying on confidentially sourced reporting should be prepared to demonstrate the reliability factors that carried the day: specificity of sourcing, corroboration by independent events or public filings, outlet and journalist reputation, and the absence of indicators of unreliability.
Finally, the March 2025 amendments to Section 220—which now require that demands be made in good faith, for a proper purpose, and with reasonable particularity as to the books and records sought—were not at issue in this case, which arose under the pre-amendment version of the statute. Practitioners should take note that the new, heightened specificity requirements may bear on both the temporal framing of the demand and the question of which post-demand evidence is “material” under the majority’s standard.
Conclusion
The Delaware Supreme Court’s 3–2 ruling in the Paramount case is an important development in Section 220 jurisprudence. By adopting a discretionary, case-by-case standard for post-demand evidence rather than the categorical bar urged by Paramount, the majority has chosen flexibility over certainty. The dissenters’ concern—that the majority’s rule will encourage premature demands and complicate summary proceedings—reflects real policy tradeoffs that the Court of Chancery will need to manage through the prudent exercise of its discretion. And the court’s unanimous endorsement of confidentially sourced news reporting as a potential basis for credible suspicion reflects the practical reality of how corporate transactions of this magnitude are documented in the public record.
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[1]Paramount Global v. State of R. I. Off. of the Gen. Treasurer, No. 129, 2026 WL 820647 (Mar. 25, 2026).
[2]Del. Code Ann. tit. 8, § 220 (2026).
[3] State of R. I. Off. of Gen. Treasurer v. Paramount Glob., 331 A.3d 179, 191–92 (Del. Ch. 2025), aff'd and remanded sub nom. Paramount Glob. v. R. I. Off. of Gen. Treasurer, No. 129, 2026 WL 820647 (Mar. 25, 2026).
[4] Paramount Glob., 331 A.3d at 199.
[5] Paramount Glob., 2026 WL 820647, at *7.
[6] Paramount Glob., 2026 WL 820647, at *9.
[7] Id. at *10
[8]NVIDIA Corp. v. City of Westland Police & Fire Ret. Sys., 282 A.3d 1, 22 (Del. 2022).
[9]Seinfeld v. Verizon Commc’ns, Inc., 909 A.2d 117, 123 (Del. 2006).
[10] Paramount Glob., 331 A.3d at 199.
[11] Paramount Glob., 2026 WL 820647, at *10
[12] Id. at *12 (Seitz, C.J., & Valihura, J., dissenting).
[13] Paramount Glob., 2026 WL 820647, at *13 (Seitz, C.J., & Valihura, J., dissenting).
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