3.3.4.1 Introduction

This research is intended to study the solution of the liquidity problem in close corporations through the appraisal remedy and the oppression remedy. It is particularly important to understand the circumstances onder which shareholders can be permitted to invoke a remedy.

Every American state has recognized some form of the appraisal remedy, but the list of transactions which trigger the appraisal remedy differs among states.1 Commentators have noted that "there are almost as many varieties of appraisal statutes as jurisdictions in the US".2 This subsection compares provisions in the RMBCA, the Delaware corporate statute and the ALI Principles.

In the RMBCA, the scope of appraisal rights is established in section 13.02. Transactions which afford this rights are: 1) mergers, 2) share exchanges, 3) disposition of assets if the shareholder is entitled to vote on the disposition, 4) reverse stock splits, 5) other amendments to the articles laid down in articles of incorporation or bylaws or board resolutions, 6) adverse modification of rights after a domestication,3 or, 7) conversion of the corporation to non-profit status or into an unincorporated entity.4 In Delaware, the triggers are limited to mergers and consolidations. Shareholders may negotiate for the appraisal remedy when it concerns a charter amendment or sale of all or substantially all of the assets of the corporation. 5

Appraisal triggers in the Principles include: 1) business combination (mergers, share exchanges and so on), 2) sale or disposition of substantial as sets where no significant continuing business is lelt, 3) charter amendment which adversely affects shareholders' rights and transactions or, 4) events described in the corporate charter document.6