MBE Rules · Business Associations
Dissenters' (Appraisal) Rights
Cal. Corp. Code §§ 1300-1312
The rule
Shareholders who dissent from certain fundamental corporate actions (reorganizations, sale of substantially all assets, certain mergers) have the right to require the corporation to purchase their shares at fair market value. Procedural steps and timing requirements are strictly enforced.
In plain English
Dissenters' rights allow shareholders to demand that a corporation buy back their shares at fair market value when they disagree with significant corporate actions like mergers or asset sales. There are specific procedures and deadlines that shareholders must follow to exercise these rights effectively.
Worked example
Shareholder A opposes a merger between Company X and Company Y. After the merger is announced, A submits a formal notice of dissent to Company X within the required timeframe. Company X must then buy A's shares at fair market value, ensuring A receives compensation despite their disagreement with the merger.
Memory hook
Dissenters can cash out when they disagree!
The trap
Exams often include tricky details about the timing and procedural requirements, leading students to overlook essential steps in asserting dissenters' rights.
How examiners test it
Questions typically present a scenario involving a corporate action and ask whether a shareholder can successfully exercise dissenters' rights, focusing on procedural compliance.
Drill this rule until it can't fail you.
Vrenberg generates unlimited questions on this exact rule, tracks your mastery of it, and brings it back until it sticks.