The availability of appraisal as a remedy for dissenting shareholders in a country�s statute places an obligation on corporations to repurchase the dissenters� shares at a fair value, where it appears that their rights or interests are about to be adversely affected. Appraisal therefore provides a �buy-out� option for both sides of the divide i.e. the majority seeking to effect or explore a particular line of action; and the minority shareholders opposed to their decision; thereby offering amicable resolution to a potentially explosive situation. Also known as appraisal rights, or dissenters� rights; the remedy is available in jurisdictions including the United States, Canada, Germany, New Zealand, and more recently South Africa. Although forging an amicable resolution as stated above, applicability of the remedy is often fraught with problems, leading to the question of whether appraisal is actually the best remedy for dissenting shareholders, or whether it merely provides an illusion of peaceful resolution in the jurisdictions in which it is applicable. The paper will take into consideration the mode or extent of applicability of the remedy in some of these jurisdictions. Problems associated with appraisal include its potential to aid minority freeze-out, and arriving at a fair valuation of the dissenter�s shares. The paper will assess these problems; consider appraisal against other possible remedies; and determine if appraisal is indeed the best alternative for dissenting shareholders.
Toun Adebanjo, University of the Free State, South Africa
Stream: Corporate and Commercial Law
This paper is part of the ECPEL2014 Conference Proceedings (View)
View / Download the full paper in a new tab/window