Protecting Minority Shareholders in a Merger Recapitalization or Sale of a Corporation
What is a “dissenting shareholder” and what are the dissenting shareholder rights under California and federal law? A dissenting shareholder is a shareholder in a corporation who does not consent to the acquisition of their corporation, a merger or recapitalization efforts which would be detrimental to the value of their position as a minority shareholder. The shareholders or minority shareholders in a corporation which is the subject of a merger or takeover bid have rights under the law. The Watkins Firm aggressively protects the interests and rights of minority shareholders. We work to resolve disputes between minority and majority shareholders.
What Happens if I Don’t Agree With the Sale or Merger of the Corporation?
If you are a minority shareholder or hold an interest in a corporation which is about to be acquired by or merged with another corporation you have many options and rights available to ensure you come through the transaction in the best possible financial or legal position. You may be entitled to receive stock in a new corporation or another corporation or some other debt instrument in exchange for your shares in the corporation to be acquired. However, you may not receive cash from the merger.
However, if you are not satisfied with the terms of the merger, acquisition or recapitalization you may have the right to force an appraisal of your shares and force the existing corporation to pay you the fair market value in cash in exchange for your shares prior to the transaction. This legal right is known as “dissenting shareholder rights” and must be executed properly and in a timely manner.
These rights are forfeited when the shareholder votes in favor of the acquisition, merger or recapitalization, and can be forfeited if a minority shareholder fails to vote against the transaction. If you don’t agree with the sale or merger of the corporation you need to contact the Watkins Firm or call 858-535-1511 for a free consultation immediately.
How Does California Law Apply to the Rights of a Dissenting Shareholder
If you are concerned about the value you are being offered for your shares in a merger or acquisition you have the right in California to hold the majority interest accountable and file a lawsuit which seeks to determine the “fair market value” of your shares. The Watkins Firm will take the steps necessary to perfect your right to receive the fair market value of your shares in cash prior to the transaction. However, these decisions must be made and action taken within a timely manner or you may lose or forfeit your options as a minority shareholder.
Minority shareholders should be aware of a streamlined merger procedure provided for under California’s Corporations Code known as a “short-form merger.” The short-form merger can significantly limit your rights as a dissenting shareholder. When the majority shareholders control 90 percent of the company may vote to contribute their shares to a newly formed corporation (often called a “parent” corporation) in exchange for all of that parent corporation’s shares. The new corporation would therefore own 90% of your existing corporation. The companies are then merged and dissenting shareholders have 30 days from the mailing of the notice of the controlling interest’s approval of the merger to either accept the offer for their shares, tender their shares to the existing corporation for an agreed upon price or reject the merger and bring a lawsuit in a local San Diego Court.
Contact Experienced Dissenting Shareholder Attorneys in San Diego
Are you looking for a law firm who has the power, experience and legal skill necessary to protect your interests as a dissenting shareholder or minority shareholder in San Diego? The Watkins Firm has served the San Diego business community and corporate shareholders for decades. We have a unique approach to dissenting shareholder disputes which is designed to resolve your challenges in the shortest possible time frame and in a cost-efficient manner.
Time is of the essence in these cases. You only have a few weeks to take action or forfeit your rights under the law. We invite you to review the recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a free consultation. We will help to protect and assert your rights as a dissenting shareholder.