§ 7-1.2-1202 - Rights of dissenting shareholders.
SECTION 7-1.2-1202
§ 7-1.2-1202 Rights of dissentingshareholders. – (a) Any shareholder electing to exercise the right of dissent shall file withthe corporation, prior to or at the meeting of shareholders at which theproposed corporate action is submitted to a vote, a written objection to theproposed corporate action. If the proposed corporate action is approved by therequired vote and the shareholder has not voted in favor of it, the shareholdermay, within ten (10) days after the date on which the vote was taken, or if acorporation is to be merged without a vote of its shareholders into anothercorporation, any of its shareholders may, within fifteen (15) days after theplan of the merger has been mailed to the shareholders, make written demand onthe corporation, or, in the case of a merger, on the surviving or newcorporation, domestic or foreign, for payment of the fair value of theshareholder's shares. If the proposed corporate action is effected, thecorporation shall pay to the shareholder, upon surrender of the certificate orcertificates representing the shares, the fair value of the shares as of theday prior to the date on which the vote was taken approving the proposedcorporate action, excluding any appreciation or depreciation in anticipation ofthe corporate action. Any shareholder failing to make demand within the ten(10) day period or the fifteen (15) day period, as the case may be, is bound bythe terms of the proposed corporate action. Any shareholder making the demandis thereafter only entitled to payment as provided in this section and is notentitled to vote or to exercise any other rights of a shareholder.
(b) No demand may be withdrawn unless the corporationconsents to it. If, however, the demand is withdrawn upon consent, or if theproposed corporate action is abandoned or rescinded or the shareholders revokethe authority to effect the action, or if, in the case of a merger, on the dateof the filing of the articles of merger the surviving corporation is the ownerof all the outstanding shares of the other corporations, domestic and foreign,that are parties to the merger, or if no demand or petition for thedetermination of fair value by a court has been made or filed within the timeprovided in this section, or if a court of competent jurisdiction determinesthat the shareholder is not entitled to the relief provided by this section,then the right of the shareholder to be paid the fair value of his or hershares ceases and his status as a shareholder is restored, without prejudice toany corporate proceedings taken during the interim.
(c) Within ten (10) days after the corporate action iseffected, the corporation, or, in the case of a merger, the surviving or newcorporation, domestic or foreign, shall give written notice of the action toeach dissenting shareholder who has made demand as provided in theseprovisions, and shall make a written offer to each dissenting shareholder topay for the shares at a specified price deemed by the corporation to be thefair value of the shares. The notice and offer must be accompanied by a balancesheet of the corporation the shares of which the dissenting shareholder holds,as of the latest available date and not more than twelve (12) months prior tothe making of the offer, and a profit and loss statement of the corporation forthe twelve (12) month period ended on the date of the balance sheet.
(d) If within thirty (30) days after the date on which thecorporate action was effected the fair value of the shares is agreed uponbetween any dissenting shareholder and the corporation, payment for the sharesmust be made within ninety (90) days after the date on which the corporateaction was effected, upon surrender of the certificate or certificatesrepresenting the shares. Upon payment of the agreed value, the dissentingshareholder ceases to have any interest in the shares.
(e) If within the period of thirty (30) days a dissentingshareholder and the corporation do not agree on the matter, then thecorporation, within thirty (30) days after receipt of written request for thefiling from any dissenting shareholder given within sixty (60) days after thedate on which the corporate action was effected, shall, or at its election atany time within the period of sixty (60) days may, file a petition in any courtof competent jurisdiction in the county in this state where the registeredoffice of the corporation is located praying that the fair value of the sharesis found and determined. If, in the case of a merger, the surviving or newcorporation is a foreign corporation without a registered office in this state,the petition must be filed in the county where the registered office of thedomestic corporation was last located. If the corporation fails to institutethe proceeding as provided, any dissenting shareholder may do so in the name ofthe corporation. All dissenting shareholders, wherever they reside, must bemade parties to the proceeding as an action against their shares quasi in rem.A copy of the petition must be served on each dissenting shareholder who is aresident of this state and served by registered or certified mail on eachdissenting shareholder who is a nonresident. Service on nonresidents may alsobe made by publication as provided by law. The jurisdiction of the court isplenary and exclusive. All shareholders who are parties to the proceeding areentitled to judgment against the corporation for the amount of the fair valueof their shares. The court may, if it so elects, appoint one or more persons asappraisers to receive evidence and recommend a decision on the question of fairvalue. The appraisers have the power and authority that is specified in theorder of their appointment or an amendment of the order. The judgment ispayable only upon and concurrently with the surrender to the corporation of thecertificate or certificates representing the shares. Upon payment of thejudgment, the dissenting shareholder ceases to have any interest in the shares.
(f) The judgment should include an allowance for interest atthe rate of interest on judgments in civil actions from the date on which thevote was taken on the proposed corporate action to the date of payment.
(g) The court shall determine and assess the costs andexpenses of any proceeding against the corporation, but all or any part of thecosts and expenses may be apportioned and assessed as the court deems equitableagainst any or all of the dissenting shareholders who are parties to theproceeding to whom the corporation has made an offer to pay for the shares ifthe court finds that the action of the shareholders in failing to accept theoffer was arbitrary or vexatious or not in good faith. The expenses includereasonable compensation for and reasonable expenses of the appraisers, butexclude the fees and expenses of counsel for and experts employed by any party;but if the fair value of the shares as determined materially exceeds the amountwhich the corporation offered to pay for the shares, or if no offer was made,the court in its discretion may award to any shareholder who is a party to theproceeding a sum that the court determines to be reasonable compensation to anyexpert or experts employed by the shareholder in the proceeding.
(h) Within twenty (20) days after demanding payment for hisshares, each shareholder demanding payment shall submit the certificate orcertificates representing his shares to the corporation for notation on thecertificate that the demand has been made. His or her failure to do so may, atthe option of the corporation, terminate his or her rights under this sectionunless a court of competent jurisdiction, for good and sufficient cause shown,directs otherwise. If shares represented by a certificate on which notation hasbeen made are transferred, each new certificate issued for the shares must bearsimilar notation, together with the name of the original dissenting holder ofthe shares, and a transferee of the shares acquires by the transfer no rightsin the corporation other than those which the original dissenting shareholderhad after making demand for payment of the fair value of the shares.
(i) Shares acquired by a corporation pursuant to payment ofthe agreed value for the shares or to payment of the judgment entered for theshares, as provided in this section, may be held and disposed of by thecorporation. However, in the case of a merger, they may be held and disposed ofas the plan of merger otherwise provides.