Delaware law has long provided that minority stockholders of a corporation that is undergoing a merger are generally entitled to an appraisal by the Delaware Court of Chancery (Court) of the fair value of their shares. The appraisal remedy is intended to provide stockholders of a Delaware corporation who believe the price being paid in a merger is inadequate with an independent judicial determination of the fair value of their shares.
Section 262 of the Delaware General Corporation Law (the DGCL) sets forth very specific procedures for stockholders to follow in order to perfect or exercise their appraisal rights. In situations where the proposed merger will be submitted for approval at a stockholders meeting a long-form merger the corporation must notify each stockholder of his appraisal rights at least 20 calendar days prior to the meeting, as well as provide a copy of the appraisal rights statute to each stockholder. Any stockholder electing to demand appraisal must either vote against the merger or refrain from voting on the merger, and must give the corporation a written demand for appraisal of his shares prior to the stockholder vote on the merger. In the context of a short-form merger where no stockholder vote is required for the merger to become effective, one of the constituent corporations or the surviving or resulting corporation must notify the stockholders within 10 days of the effective date of the merger that appraisal rights are available. The stockholders then have 20 days to demand in writing an appraisal of their shares. Within 120 days after the effective date of the merger, the stockholders who properly perfected their appraisal rights may file a petition in the Court demanding a determination of the value of their stock.