Has the new Delaware appraisal rights law backfired?

BVWireIssue #179-3
August 16, 2017

Part of the new provisions designed to curtail the use of the appraisal remedy by dissenting shareholders in Delaware allows for a prepayment to dissenters in order to stop the interest accrual clock. This new law went into effect Aug. 1, 2016. Prior research found that the prepayment provision was “likely to greatly reduce appraisal filings.”

Opposite effect: New research reveals that appraisal filings have actually continued to increase despite the new law and despite the overall decline in M&A activity. The authors note, however, that one year of data is not enough to draw any firm conclusions. Some observers believe that the new prepayments have sparked more appraisal actions because they solved the liquidity problems of investors who weren’t able to bring such actions before.

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