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In corporate law, appraisal remedy is the statutory right of corporate shareholders who dissent or oppose some extraordinary corporate action, for example a merger, to have their shares judicially appraised and to demand that the corporation buy back their shares at the appraised value.
The appraisal remedy is entirely a creature of statute. Appraisal remedy is intended to provide those shareholders who dissent from a merger on the basis of inadequacy of offering price with an independent judicial determination of the fair value of their shares. [Alabama By-Products Corp. v. Cede & Co. ex rel. Shearson Lehman Bros., 657 A.2d 254 (Del. 1995).]
Appraisal remedy is also known as appraisal right, dissenters’ right, or right of dissent and appraisal.
The following is an example of a case law referring to appraisal remedy :
The appraisal remedy evolved as a means of balancing the demands for majority rule against the need to protect minority stockholders against illiquidity or misappropriation of value. Thus, when statutes were amended to provide for majority rule in certain fundamental corporate changes, minority stockholders who were dissatisfied with the consideration paid for their shares or unwilling to participate in the changed entity were given the right to a judicial determination of the fair value of their shares. Unlike other stockholder remedies, the appraisal remedy does not depend on a showing of illegality, fraud, bad faith or some other breach of fiduciary duty. A recent commentary states that appraisal's utility may be that it "facilitates the market for corporate control by providing a cheaper method of eliminating shareholders," because those shareholders may seek appraisal instead of pursuing breach of fiduciary duty actions, which are generally more costly and disruptive to the enterprise. Professor Thomas aptly points out, "such savings are more likely to occur when appraisal is the shareholders' exclusive remedy." [In re Unocal Exploration Corp. Shareholders Litig., 793 A.2d 329, 340 (Del. Ch. 2000)].