Business Law:

CASE: Compaq Computer Corporation v. Horton (1993).

Please summarize the following case. include the facts, issues, reasons, and decisions.

Horton , a Compaq SH, requested that he be allowed to inspect Compaqs stock ledger and other related materials. Horton informed Compaq that he wished to communicate w/other Compaq SHs to inform them of his pending SHs suit against Compaq and to ascertain whether any of them would desire to become associated w/that suit. Compaq refused the demand, stating that the purpose described in the demand letter was not a proper purpose under 220(b) of the General Corporate Law of the State of Delaware. Concluding that Horton had stated a proper purpose for inspecting the various documents, the court of chancery ordered Compaq to permit him to inspect and copy the SH lists. Compaq appealed.

May SHs inspect stocklists for the purpose of communicating w/fellow SHs, not only about pending litigation, but to solicit their interest in joining it?

SHs may inspect stocklists for the purpose of communicating w/fellow SHs, not only about pending litigation, but to solicit their interest in joining it. Pursuant to 220(b), any SH shall, upon written demand, have the right to inspect and copy a SH list for any proper purpose the corp.s stock ledger. Proper purpose means a purpose reasonably related to such persons interest as a SH. A SHs right to inspect and copy a SH list is not absolute. Rather, it is a qualified right depending on the facts presented. Hortons ultimate objective, to solicit additional parties to his suit against Compaq, may impose substantial expenses on the company. Compaq argues that such a purpose is per se improper b/c it is adverse to the interests of the corp. But P as a current SH of Compaq, has nothing to gain by harming the legitimate interests of the company. The inclusion of more Hortons will not substantially increase Compaqs costs of defending the action. Compaq has no legitimate interest in avoiding the payment of compensatory damages which its management or advisors may owe to those who own the enterprise. Thus, a proper purpose may be stated in these circumstances, notwithstanding the lack of a direct benefit flowing to the corp. Horton seeks in good faith to solicit the support of other similarly situated Compaqs SH, not only to seek monetary redress for their individual economic injuries, but also to prevent further acts of fraud or mismanagement from disrupting the fair market value of Compaqs stock. Compaq has failed to meet the burden imposed on it by law to show that Horton acted w/an improper purpose. So long as Horton establishes a single proper purpose related to his role as SH, all other purposes are irrelevant. Affirmed.