3.3.5.1.2 Some other issues concerning the procedures

In the Delaware statute, within 60 days after the effective date of the transaction, shareholders can notify the corporation in writing that they withdraw the request for appraisal and accept the conditions of the transaction.1 The RMBCA has a similar provision.2 The Principles recommend that any jurisdiction should provide a comparable opportunity for withdrawal when reexamining or re-codifying its appraisal remedy.3

The RMBCA requires the corporation to commence a proceeding to determine the fair value.4 This unitary proceeding saves courts from multiple actions. Delaware allows the proceeding to be initiated either by dissenting shareholders or the resulting corporation but the proceeding can be consolidated as well.5

The most problematic point in exercising appraisal rights is informational asymmetry. A shareholder who wants to exercise the appraisal remedy must elect to dissent prior to the vote, and has to notify the corporation of the estimate fair value when dissatisfied with the corporation's valuation.6 Usually, individual shareholders are unlikely to know the opinions of other shareholders and most importantly, at this early point, with scant information on other comparable options, they can hardly draw any sensible conclusion whether or not the proposed transaction is favourable to them.7 Nor can they make a reliable determination of fair value at this early stage, owing to lack of information.8 When more information is available later, and the fair price offered by dissenters turns out to be unreasonable, the dissenters run the risk of sharing litigation expenses.

In the RMBCA, the appraisal remedy is exclusive to relevant corporate actions unless wrongdoing can be proved in two situations: serious procedural defects in approving the action or fraud or material misrepresentation which have caused the corporate action to be approved mistakenly. Misrepresentation not only includes misleading statements but also omission of a material fact necessary for a vote. This viewpoint of the RMBCA underlines that as long as the corporate action is approved by the majority without the flaws listed above, the action can proceed regardless of any objections from the minorities. The minority shareholders cannot bar or vindicate the action by asserting that it was an unwise or dangerous, inadequately considered choice, nor can they assen any breach of fiduciary duties in the transaction other than the above situations. Facilitation of corporate actions is the very reason that the appraisal remedy came into existence. There is no uniform practice on this issue across all jurisdictions. Delaware, for example, allows appraisal proceedings and claims of breach of fiduciary duties to be combined.9 Several cases will be studied in section 3.4.5.1 after the oppression remedy has been introduced.