Disagreements oftentimes arise among shareholders when it comes to running a business. Sometimes minority shareholders are so strongly opposed to a transaction that they would rather sell their shares than support the majority’s decision. Dissenters’ rights ensure that minority shareholders can receive fair market value for their shares if they disagree with certain corporate changes. At the same time, dissenters’ rights ensure that a minority group of shareholders cannot prevent the majority from taking the business in new directions.
Certain corporate actions trigger a right for shareholders to dissent and receive fair value of their shares. The following corporate transactions are all grounds for dissent in Arizona:
- Certain mergers.
- Certain stock purchases.
- Certain asset purchases.
- Certain amendments to the Articles of Incorporation that materially alter shareholder rights.
- Certain transactions that trigger dissenting rights, as indicated in the Articles of Incorporation, corporate bylaws or resolution of the board.
Dissenting to a corporate transaction is only the first step for dissenting shareholders. Dissenting shareholders must follow strict guidelines in order to receive compensation for their shares. Moreover, majority and dissenting shareholders oftentimes disagree on what the fair value is for shares in the business. Arriving on a purchase point for dissenters’ shares can involve a long and contentious appraisal process. Dissenters should never undertake this process without experienced legal counsel.
