Delaware Section 262 of the Delaware General Corporation Law

• Category: Corporations - Mergers and Acquisitions
• State: Multi-State
• Control #: US-CC-12-829
• Format: Word; Rich Text

Description

This is a multi-state form covering the subject matter of the title. Delaware Section 262 of the Delaware General Corporation Law, commonly known as the appraisal rights statute, provides shareholders of Delaware corporations the right to seek a court-appraised fair value for their shares in the event of certain corporate transactions. The main purpose of this statute is to protect shareholders' interests by allowing them to dissent from major corporate actions that they believe undervalue their investment. Under Delaware Section 262, shareholders who disagree with the terms of certain transactions, such as mergers, consolidations, or certain transfers of assets or stock, have the option to demand appraisal of their shares. This means that instead of accepting the consideration offered by the corporation, dissenting shareholders can exercise their right to receive an independent valuation of their shares by the court. To initiate the appraisal process, shareholders must follow a specific procedure outlined in Delaware Section 262. They are required to deliver a written notice of their intent to demand appraisal to the corporation before the shareholder vote on the proposed transaction. This notice must be provided in a timely manner and include specific information, such as the number and class of shares held, the desired appraisal value, and a statement of the shareholder's intentions regarding their shares. After the shareholder vote, if the transaction is approved, dissenting shareholders who have properly exercised their appraisal rights must promptly file a petition with the Delaware Court of Chancery to commence the appraisal proceeding. The court then determines the fair value of the dissenting shareholders' shares as of the date prior to the announcement of the proposed transaction. Certain conditions and limitations apply to Delaware Section 262. For instance, shareholders must be owners of shares before the transaction was approved, and the transaction must trigger appraisal rights as specified by Delaware law. Additionally, shareholders may lose their appraisal rights if they vote in favor of the proposed transaction or fail to comply with the procedural requirements within specified time limits. There are two types of Delaware Section 262 appraisal proceedings: statutory appraisal and appraisal by contract. Statutory appraisal refers to appraisal rights provided by default under the Delaware General Corporation Law, while appraisal by contract arises when additional rights are established through agreements such as stockholders' agreements, voting agreements, or merger agreements. Both types provide shareholders a means to seek fair value for their shares. In conclusion, Delaware Section 262 of the Delaware General Corporation Law grants shareholders of Delaware corporations the right to demand appraisal of their shares in certain corporate transactions. By allowing dissenting shareholders to obtain an independent valuation, this statute aims to safeguard shareholders' interests and ensure fair compensation for their investments.

Delaware Section 262 of the Delaware General Corporation Law, commonly known as the appraisal rights statute, provides shareholders of Delaware corporations the right to seek a court-appraised fair value for their shares in the event of certain corporate transactions. The main purpose of this statute is to protect shareholders' interests by allowing them to dissent from major corporate actions that they believe undervalue their investment. Under Delaware Section 262, shareholders who disagree with the terms of certain transactions, such as mergers, consolidations, or certain transfers of assets or stock, have the option to demand appraisal of their shares. This means that instead of accepting the consideration offered by the corporation, dissenting shareholders can exercise their right to receive an independent valuation of their shares by the court. To initiate the appraisal process, shareholders must follow a specific procedure outlined in Delaware Section 262. They are required to deliver a written notice of their intent to demand appraisal to the corporation before the shareholder vote on the proposed transaction. This notice must be provided in a timely manner and include specific information, such as the number and class of shares held, the desired appraisal value, and a statement of the shareholder's intentions regarding their shares. After the shareholder vote, if the transaction is approved, dissenting shareholders who have properly exercised their appraisal rights must promptly file a petition with the Delaware Court of Chancery to commence the appraisal proceeding. The court then determines the fair value of the dissenting shareholders' shares as of the date prior to the announcement of the proposed transaction. Certain conditions and limitations apply to Delaware Section 262. For instance, shareholders must be owners of shares before the transaction was approved, and the transaction must trigger appraisal rights as specified by Delaware law. Additionally, shareholders may lose their appraisal rights if they vote in favor of the proposed transaction or fail to comply with the procedural requirements within specified time limits. There are two types of Delaware Section 262 appraisal proceedings: statutory appraisal and appraisal by contract. Statutory appraisal refers to appraisal rights provided by default under the Delaware General Corporation Law, while appraisal by contract arises when additional rights are established through agreements such as stockholders' agreements, voting agreements, or merger agreements. Both types provide shareholders a means to seek fair value for their shares. In conclusion, Delaware Section 262 of the Delaware General Corporation Law grants shareholders of Delaware corporations the right to demand appraisal of their shares in certain corporate transactions. By allowing dissenting shareholders to obtain an independent valuation, this statute aims to safeguard shareholders' interests and ensure fair compensation for their investments.