Previously, we began discussing shareholders’ rights of dissent and appraisal in connection with merger transactions. As we noted last time, shareholders with voting rights don’t always have dissent and appraisal rights in every case, and in cases where they otherwise do, they can forfeit them if they fail to properly exercise them.
When the rights of dissent and appraisal do apply, specific procedures must be followed to properly exercise these rights. When these procedures are followed, the rights of dissent and appraisal are “perfected.” Working with an experienced attorney helps ensure a shareholder has guidance in perfecting his or her rights, and that their rights are protected in any disputes around this issue.
The procedure for perfecting dissent and appraisal rights includes providing notice of objection to the merger transaction, voting against or avoiding giving consent to the merger proposal, and demanding in writing payment of the fair value of the shareholder’s ownership interests. Shareholders who do not make a demand for appraisal or provide notice of objection within the proper time forfeit the rights of dissent and appraisal. These rights are also lost if a shareholder fails to submit certificates for the ownership interests at issue.
Shareholders who fulfill their duties under state law ordinarily have the right to file a suit to recover the value of their ownership interest or money damages stemming from a merger, but this is not the case if the corporation fulfills its duties and the shareholder does not.
Shareholders should always have a sound understanding of their rights under the law when it comes to proposed mergers and acquisitions, and should work with experienced legal counsel to ensure they properly fulfill their obligations and that their rights are protected when disputes arise.