Do You Know Your Shareholder Rights To Be Cashed Out In A Merger?
If you are a shareholder in a private corporation that is going to be acquired by or merged with another company, the terms of the deal may entitle you to receive stock in another corporation or a debt instrument of some kind in exchange for your shares in the acquired corporation, but no cash. If you are not satisfied with the terms of the deal and would prefer to receive the fair market value for your shares in cash and in lieu of the stock or any other consideration you are slated to receive under the terms of the deal, in many such merger and acquisition transactions you have the right under California law to require the corporation in which you hold shares to pay you the fair market value in cash for your shares.
This statutory right is referred to as “dissenting shareholder” rights. Such rights will be lost if the shareholder votes her shares in favor of the merger or acquisition transaction and, in certain circumstances, dissenting shareholder rights will be lost if the shareholder fails to vote against the merger or acquisition transaction. If there is any dispute about the fair market value of your shares you have the right to file a timely suit in superior court and seek a determination of the fair market value of your shares. If you want to exercise rights as a dissenting shareholder in a merger or acquisition transaction you should consult with an attorney to confirm that you have dissenter’s rights and to advise you concerning the deadlines and procedural steps in perfecting your right to receive the fair market value for your shares in cash. Dissenter’s rights are easy to lose should you fail to timely comply with all of the necessary steps specified under the law.
If you would like to exercise your rights as a dissenting shareholder, and you live in the state of California, call me for a free consultation to discuss your case.