2024-07-24Introduction to Shareholder's Appraisal Rights in U.S. Fundamental Corporate Change
(1) |
In some states, an amendment of the articles (at least, one that will harm a class of shareholders) gives rise to a right of appraisal (for the shareholders harmed). |
(2) |
In some states, shareholders of both in a merger (the disappearing corporations and the surviving corporation) have the right of appraisal. In others, however, only the shareholders of the disappearing corporation will have it. |
(3) |
In most states, only shareholders who were entitled to vote on the fundamental change will have the right of appraisal. In a few states, though, even holders of non-voting stock will be able to exercise the right. |
(1) |
First, before the shareholders vote on the matter, the dissenting shareholder must file with the corporation a statement of his/her objection to the proposed change and of his/her intent to demand payment if the transaction is approved. |
(2) |
Second, the shareholder must abstain or vote against the proposed change. |
(3) |
And third, within a set time after notification from the corporation that the change was approved (usually 20 days), the shareholder must make a written demand to be bought out and tender her stock to the corporation. |