A fight among siblings over access to corporate records ended with the Delaware Supreme Court affirming that three stockholders of sports streaming platform FloSports Inc. failed to follow the procedural steps required under the Delaware General Corporation Law.

In an opinion issued Monday, the high court held that the stockholders' attempts to amend their litigation and revise their requests, filed within days of serving a new demand, violated the statute's mandatory waiting period and failed to prove that a revised demand was properly verified.

"Because the stockholders did not meet Section 220's form and manner requirements, we affirm the Court of Chancery's decision denying inspection," the justices wrote.

They emphasized that the siblings' procedural missteps, rather than the substance of their stated purpose to value and potentially sell their shares, controlled the outcome. The high court said the appellants' argument that their amended filing complied with the law "finds no support in the text or purpose of Section 220."

The dispute traces back to a July 2023 books-and-records suit filed in the Delaware Chancery Court by three siblings of FloSports founder and former CEO Martin Floreani. The stockholders claimed they were being denied financial information and sought records to value their shares and potentially sell them. Chancellor Kathaleen St. J. McCormick ultimately dismissed the case in October 2024 after finding that revised, amended demands failed to comply with Section 220's "form and manner" requirements, a decision now affirmed on appeal.

Under Section 220's timing and verification rules, stockholders are required to make a written demand under oath, wait five business days for a response and then file suit only if the corporation refuses or fails to reply. The Supreme Court agreed with Chancellor McCormick that the FloSports siblings' attempts to fold a September 2023 demand into existing litigation on the same day it was served ran afoul of that framework.

According to the opinion, the siblings — Martin, Christina and Charlene Floreani — served three demands over 10 months seeking financial statements, valuation materials and other records to assess their investments in the privately held, Austin-based company. Each demand was rejected by the company for different form-and-manner failures, including missing powers of attorney, questions about whether the requests were made under oath and the timing of their filings.

The Supreme Court held that the third demand failed because the siblings filed a motion to amend their complaint on the same day they served the demand, forcing FloSports into litigation before the required five-day period expired. The high court said that filing constituted an impermissible "application" to the court, depriving FloSports of the "litigation-free window" the statute guarantees.

The justices also affirmed that the second demand failed because the siblings could not show that the version they verified under oath two weeks earlier was the same version ultimately sent to the company. The high court noted there were meaningful changes between drafts and that the siblings invoked privilege rather than produce evidence showing no substantive revisions occurred. As a result, the court concluded they "failed to carry their burden of showing that the final version of the second demand was verified under oath."

Because none of the demands strictly complied with Section 220's procedural requirements, the Supreme Court did not reach arguments concerning whether the siblings had a proper purpose for seeking documents.

Appellants Martin Floreani, Christina Floreani and Charlene Floreani are represented by Scott James Leonhardt of Esbrook PC.

FloSports Inc. is represented by John L. Reed, Peter H. Kyle, Daniel P. Klusman and Benjamin D. Schuman of DLA Piper.

The case is Martin Floreani, Christina Floreani and Charlene Floreani v. FloSports Inc., case number 491,2024, in the Delaware Supreme Court. The case under appeal is case number 2023-0684 in the Delaware Chancery Court.