Appraisal Right:
Noun
Definition: A legal right granted to shareholders of a corporation, allowing them to demand a fair and independent valuation of their shares in the event of certain corporate actions, such as mergers, acquisitions, or other significant transactions. The appraisal right provides shareholders with the option to dissent from the proposed transaction and receive a cash payment equal to the fair value of their shares as determined by an impartial appraiser or a court. This right aims to protect shareholders from potential undervaluation or unfair treatment in corporate transactions and ensures they receive fair compensation for their ownership interests.
An appraisal right, also known as dissenters’ rights or appraisal remedy, is a legal provision that allows shareholders of a company to dissent from a proposed corporate action and demand a fair value for their shares. This right is typically available in situations such as mergers, consolidations, or certain types of corporate reorganisations.
When a shareholder exercises their appraisal right, they are essentially challenging the fairness of the proposed transaction and seeking an independent valuation of their shares. The shareholder must typically follow specific procedures and timelines set forth in the applicable corporate laws or the company’s bylaws to properly exercise this right.
Once the shareholder has properly exercised their appraisal right, the company is required to pay the dissenting shareholder the fair value of their shares, as determined by an independent appraiser or through a court proceeding. The fair value is usually based on the intrinsic value of the shares, taking into account various factors such as the company’s financial condition, future prospects, and market conditions.
Appraisal rights are designed to protect minority shareholders from being forced to accept a transaction that they believe undervalues their shares. By providing an avenue for dissenting shareholders to receive fair compensation for their shares, appraisal rights help ensure that shareholders are treated fairly in corporate transactions.
It is important to note that the availability and specific requirements of appraisal rights may vary depending on the jurisdiction and the specific circumstances of the corporate action. Shareholders considering exercising their appraisal rights should consult with legal counsel to understand their rights and obligations under the applicable laws.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 11th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/appraisal-right/
- Modern Language Association (MLA):Appraisal Right. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/appraisal-right/.
- Chicago Manual of Style (CMS):Appraisal Right. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/appraisal-right/ (accessed: May 09 2024).
- American Psychological Association (APA):Appraisal Right. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/appraisal-right/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts