In In re China Agritech, Inc. Shareholder Derivative Litigation, No. 7163 (Del. Ch. May 21, 2013), the Delaware Court of Chancery held that the company’s failure to produce key information in response to a prior § 220 books-and-records action indicated that a demand on the board would have been futile. The suit involved derivative claims for mismanagement and inadequate supervision regarding a Delaware corporation that purportedly manufactured and marketed fertilizer in China. The court observed that there have been recurring oversight problems with Delaware shell corporations acquired by foreign entities to access U.S. capital markets to pursue business in Asia: “Using a defunct Delaware corporation that happens to retain a public listing to evade the regulatory regime established by the federal securities laws is contrary to Delaware public policy.” Prior to filing the derivative suit, plaintiff had made a § 220 records demand on the company, followed by a books and records action. The company produced few records in response. For example, the company “did not produce any Audit Committee meeting minutes for 2009 or 2010,” which “implies that the Audit Committee did not meet” during that period. Given the “absence of books and records in critical areas,” and stressing that “it is more reasonable to infer that exculpatory documents would be provided” in response to a § 220 demand “than to believe the opposite,” the court concluded that the complaint adequately supported the allegations of board misconduct “with inferences that this Court can reasonably draw from the absence of books and records that the Company could be expected to produce.”