3.4.1 Current appraisal rights

Appraisal rights have been included in English law for many years, though with limited scope. Only two appraisal rights applying to private limited companies can be discovered. A possible explanation for the sparse use of appraisal rights in English law is given by Davies. He states that this might be due to the effect of the appraisal right, namely that it places "a potentially substantial financial hurdle in the way of the decision which triggers the valuation right."1

The appraisal right to be described in this paragraph is found in S. 111 IA 1986. It can be used in the situation of a voluntary winding up of the company, when the business or property of the company is transferred to another company and compensation is provided by means of, for in stance, shares in the transferee company.

Another appraisal right is found in S. 983 up to and including 985 Companies Act 2006 and applies when a majority shareholder holds 90% or more of the voting shares in a company after a takeover bid. The appraisal right is applied on a class-by-class basis. Although the sell-out right is prescribed by the Thirteenth EC Company Law Directive, its roots go back to 1948.2 This sellout right is particularly relevant for public companies, when its shares are traded on a regulated market, but also when there is no public trade. The sellout right is of very limited relevance for private limited companies. For that reason, I will not describe this appraisal right.