Washington 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. Washington Section 262 of the Delaware General Corporation Law, commonly known as the appraisal statute, grants stockholders the right to seek appraisal of their shares in certain circumstances. This provision is a crucial aspect of the corporate legal framework, ensuring fairness and protecting the interests of minority shareholders in Delaware corporations. Under Section 262, shareholders who dissent from a proposed corporate action may request appraisal of their shares. This typically occurs when the corporation plans to merge, consolidate, or sell substantially all its assets. The purpose of appraisal rights is to allow dissenting shareholders to receive fair value for their shares, independent of the price offered in the proposed transaction. To exercise their appraisal rights, shareholders are required to follow a specific process outlined in Washington Section 262. Firstly, they must file a written notice of their intention to seek appraisal before the shareholder vote on the proposed action. This notice should include certain details, such as the number and class of shares owned and the demand for appraisal. Failure to provide this notice may lead to a loss of appraisal rights. Once the shareholder vote takes place, the dissenting shareholders who have properly complied with the notice requirement are entitled to file a petition in the Delaware Court of Chancery. The court serves as the forum for determining the fair value of the shares in question and ensuring a fair appraisal process. Shareholders should be aware that they bear the cost of initiating the appraisal proceedings, which can be significant. When dealing with appraisal cases, the Delaware courts employ various valuation methodologies, including market value, comparable company analysis, discounted cash flow analysis, and other appropriate techniques. The objective is to arrive at a fair and impartial assessment of the value of the shares being appraised. It is worth noting that although Section 262 grants the general right to appraisal, there are certain exceptions and limitations. For instance, it typically does not apply to shares listed on a stock exchange, nor does it apply in scenarios where shareholders receive the same consideration as the majority of investors. Furthermore, Section 262 does not extend to certain types of corporations, such as non-profit corporations or corporations organized as statutory trusts. In conclusion, Washington Section 262 of the Delaware General Corporation Law is a vital provision that upholds the rights of shareholders seeking appraisal. It ensures that dissenting shareholders have a mechanism to receive fair value for their shares when a significant corporate action is proposed. By offering an avenue for independent valuation, this law safeguards the interests of minority shareholders and maintains the integrity of the Delaware corporate legal system.

Washington Section 262 of the Delaware General Corporation Law, commonly known as the appraisal statute, grants stockholders the right to seek appraisal of their shares in certain circumstances. This provision is a crucial aspect of the corporate legal framework, ensuring fairness and protecting the interests of minority shareholders in Delaware corporations. Under Section 262, shareholders who dissent from a proposed corporate action may request appraisal of their shares. This typically occurs when the corporation plans to merge, consolidate, or sell substantially all its assets. The purpose of appraisal rights is to allow dissenting shareholders to receive fair value for their shares, independent of the price offered in the proposed transaction. To exercise their appraisal rights, shareholders are required to follow a specific process outlined in Washington Section 262. Firstly, they must file a written notice of their intention to seek appraisal before the shareholder vote on the proposed action. This notice should include certain details, such as the number and class of shares owned and the demand for appraisal. Failure to provide this notice may lead to a loss of appraisal rights. Once the shareholder vote takes place, the dissenting shareholders who have properly complied with the notice requirement are entitled to file a petition in the Delaware Court of Chancery. The court serves as the forum for determining the fair value of the shares in question and ensuring a fair appraisal process. Shareholders should be aware that they bear the cost of initiating the appraisal proceedings, which can be significant. When dealing with appraisal cases, the Delaware courts employ various valuation methodologies, including market value, comparable company analysis, discounted cash flow analysis, and other appropriate techniques. The objective is to arrive at a fair and impartial assessment of the value of the shares being appraised. It is worth noting that although Section 262 grants the general right to appraisal, there are certain exceptions and limitations. For instance, it typically does not apply to shares listed on a stock exchange, nor does it apply in scenarios where shareholders receive the same consideration as the majority of investors. Furthermore, Section 262 does not extend to certain types of corporations, such as non-profit corporations or corporations organized as statutory trusts. In conclusion, Washington Section 262 of the Delaware General Corporation Law is a vital provision that upholds the rights of shareholders seeking appraisal. It ensures that dissenting shareholders have a mechanism to receive fair value for their shares when a significant corporate action is proposed. By offering an avenue for independent valuation, this law safeguards the interests of minority shareholders and maintains the integrity of the Delaware corporate legal system.