In our last post, we wrote about a lawsuit a Whole Foods shareholder is filing against the company in an effort to block the proposed merger of Whole Foods and Amazon. As we noted, shareholders will be voting later this month on whether to approve the transaction. It will be interesting to see what becomes of the vote.
Under Texas law, shareholder approval of merger transactions is required in some circumstances, though not in others. Whether or not shareholder approval is necessary for a merger to move forward depends not only on state statute, but also on the requirements of a corporation’s certificate of incorporation. The latter must, of course, be in line with the requirements of state law, but they can include additional protections and requirements.
In cases where shareholder approval is required, shareholders with voting rights have a right to be notified of a merger plan and to dissent from the plan within a certain number of days of the effective date of the merger. Specific rules apply to notification to ensure shareholders have the information they need to exercise their rights.
In addition to the right to dissent from a plan of merger, shareholders with voting rights also have the right to obtain the fair value of their ownership interests through an appraisal. The rights of dissent and appraisal are applicable in certain merger transactions, and it is important for shareholders to have a solid understanding of when these rights are available to them and how to properly exercise them. This is where an experienced attorney is an essential asset.
We’ll say more about this in our next post.