§ 33-856 — Right to appraisal.

Connecticut § 33-856

• Jurisdiction: Connecticut
• Title 33: Corporations
• Ch. 601: Business Corporations

Text

(a) A shareholder is entitled to appraisal rights, and to obtain payment of the fair value of that shareholder's shares, in the event of any of the following corporate actions: (1) Consummation of a merger to which the corporation is a party (A) if shareholder approval is required for the merger by section 33-817 , or would be required but for the provisions of subdivision (10) of section 33-817 , except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares of any class or series that remain outstanding after consummation of the merger, or (B) if the corporation is a subsidiary and the merger is governed by section 33-818 ; (2) Consummation of a share exchange to which the corporation is a party the shares of which will be acquired, except that appraisal rights shall not be available to any shareholder of the corporation with respect to any class or series of shares of the corporation that is not acquired in the share exchange; (3) Consummation of a disposition of assets pursuant to section 33-831 if the shareholder is entitled to vote on the disposition, except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares of any class or series if (A) under the terms of the corporate action approved by the shareholders there is to be distributed to shareholders in cash the corporation's net assets, in excess of a reasonable amount reserved to meet claims of the type described in sections 33-886 and 33-887 , (i) within one year after the shareholders' approval of the action, and (ii) in accordance with their respective interests determined at the time of such distribution, and (B) the disposition of assets is not an interested transaction; (4) An amendment of the certificate of incorporation with respect to a class or series of shares that reduces the number of shares of a class or series owned by the shareholder to a fraction of a share if the corporation has the obligation or right to repurchase the fractional share so created; (5) If the corporation is not a benefit corporation, as defined in section 33-1351 , (A) an amendment of the certificate of incorporation to state that the corporation is a benefit corporation; (B) consummation of a merger to which the corporation is a party in which the surviving corporation will be a benefit corporation or in which shares in the corporation will be converted into a right to receive shares of a benefit corporation; or (C) consummation of a share exchange to which the corporation is a party and the shares of the corporation will be exchanged for shares of a benefit corporation; (6) Consummation of a division, as defined in section 38a-156r , to which the corporation is a party, provided any such appraisal is subject to the limitations of section 38a-156y ; or (7) Any other merger, share exchange, disposition of assets or amendment to the certificate of incorporation; in each case to the extent provided by the certificate of incorporation, the bylaws or a resolution of the board of directors. (b) Notwithstanding subsection (a) of this section, the availability of appraisal rights under subdivisions (1) to (5), inclusive, of subsection (a) of this section shall be limited in accordance with the following provisions: (1) Appraisal rights shall not be available for the holders of shares of any class or series of shares which is: (A) A covered security under Section 18(b)(1)(A) or (B) of the Securities Act of 1933, as amended; (B) Traded in an organized market and has at least two thousand shareholders and a market value of at least twenty million dollars, exclusive of the value of such shares held by the corporation's subsidiaries, senior executives and directors and by any beneficial shareholders and any voting trust beneficial owner owning more than ten per cent of such shares; or (C) Issued by an open-end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and which may be redeemed at the option of the holder at net asset value. (2) The applicability of subdivision (1) of this subsection shall be determined as of: (A) The record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders to act upon the corporate action requiring appraisal rights or, in the case of an offer made pursuant to subdivision (10) of section 33-817 , the date of such offer; or (B) if there is no meeting of shareholders and no offer made pursuant to subdivision (10) of section 33-817 , the day before the consummation of the corporate action or effective date of the amendment of the certificate of incorporation, as applicable. (3) Subdivision (1) of this subsection shall not be applicable and appraisal rights shall be available pursuant to subsection (a) of this section for the holders of any class or series of shares (A) who are required by the terms of the corporate action requiring appraisal rights to accept for such shares anything other than cash or shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies the standards set forth in subdivision (1) of this subsection at the time the corporate action becomes effective, or (B) in the case of the consummation of a disposition of assets pursuant to section 33-831 , unless the cash, shares or proprietary interests received in the disposition are, under the terms of the corporate action approved by the shareholders, to be distributed to the shareholders, as part of a distribution to shareholders of the net assets of the corporation in excess of a reasonable amount to meet claims of the type described in sections 33-886 and 33-887 , (i) not later than one year after the shareholders' approval of the action, and (ii) in accordance with their respective interests determined at the time of the distribution. (4) Subdivision (1) of this subsection shall not be applicable and appraisal rights shall be available pursuant to subsection (a) of this section for the holders of any class or series of shares where the corporate action is an interested transaction. (c) Notwithstanding any other provision of this section, the certificate of incorporation as originally filed or any amendment to the certificate of incorporation may limit or eliminate appraisal rights for any class or series of preferred shares, except that (1) no such limitation or elimination shall be effective if the class or series does not have the right to vote separately as a voting group, alone or as part of a group, on the action, and (2) any such limitation or elimination contained in an amendment to the certificate of incorporation that limits or eliminates appraisal rights for any of such shares that are outstanding immediately before the effective date of such amendment or that the corporation is or may be required to issue or sell thereafter pursuant to any conversion, exchange or other right existing immediately before the effective date of such amendment shall not apply to any corporate action that becomes effective within one year of the effective date of such amendment if such action would otherwise afford appraisal rights. (d) Where the right to be paid the value of shares is made available to a shareholder by this section, such remedy shall be the exclusive remedy as holder of such shares against the corporate actions described in this section, whether or not the shareholder proceeds as provided in sections 33-855 to 33-872 , inclusive.

Legislative History

(P.A. 94-186, S. 148, 215; P.A. 96-271, S. 111, 254; P.A. 01-199, S. 16; P.A. 09-55, S. 3; P.A. 11-147, S. 8; P.A. 12-32, S. 13; P.A. 14-217, S. 155; P.A. 17-2, S. 11; 17-108, S. 16.) History: P.A. 94-186 effective January 1, 1997; P.A. 96-271 replaced “articles” of incorporation with “certificate” of incorporation where appearing, effective January 1, 1997; P.A. 01-199 substantially revised section including amending Subsec. (a) to provide that a shareholder is entitled to “appraisal rights” in the event of certain corporate action rather than to “dissent from” such action, revising Subdivs. (1) to (5), inclusive, of Subsec. (a) re transactions which afford appraisal rights, adding new Subsec. (b) re market exception to the availability of appraisal rights and the availability of appraisal rights in conflict transactions, adding new Subsec. (c) re limitation or elimination of appraisal rights for preferred shares, redesignating former Subsec. (b) as Subsec. (d) and making technical changes throughout section for purposes of gender neutrality; P.A. 09-55 amended Subsec. (b) to replace former provisions of Subdiv. (1)(A) re listed shares with provision re shares that are a covered security, replace in Subdiv. (1)(B) “not so listed or designated but has at least two thousand shareholders and the outstanding shares of such class or series has a market value of at least twenty million dollars” with “Traded in an organized market and has at least two thousand shareholders and a market value of at least twenty million dollars”, add new Subdiv. (1)(C) re shares issued by an open-end management investment company, and replace former Subdivs. (4) and (5) with new Subdiv. (4) re availability of appraisal rights where corporate action is an interested transaction, and amended Subsec. (d) to replace “corporate transactions” with “corporate actions”; P.A. 11-147 amended Subsec. (b)(2)(A) to delete provision re record date determined shareholders entitled “to vote at” meeting; P.A. 12-32 amended Subsec. (a)(3) by adding exception re when appraisal rights shall not be available and amended Subsec. (b)(3) by designating existing provisions re appraisal rights for certain holders as Subpara. (A) and adding Subpara. (B) re availability of appraisal rights in the case of consummation of a disposition of assets; P.A. 14-217 amended Subsec. (a) to add new Subdiv. (5) re availability of appraisal rights in certain corporate actions involving a benefit corporation and redesignate existing Subdiv. (5) as Subdiv. (6), and made a conforming change in Subsec. (b); P.A. 17-2 amended Subsec. (a) to add new Subdiv. (6) re appraisal subject to limitations, redesignate existing Subdiv. (6) as Subdiv. (7) and made a conforming change; P.A. 17-108 amended Subsec. (a)(1)(A) by replacing “and the shareholder is entitled to vote on the merger” with “or would be required but for the provisions of subdivision (10) of section 33-817”, amended Subsec. (a)(2) by replacing “as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the exchange” with “the shares of which will be acquired” and by replacing “that is not exchanged” with “that is not acquired in the share exchange”, amended Subsec.(a)(5)(B) by replacing “entity” with “corporation”, amended Subsec. (b)(1)(B) by adding “and any voting trust beneficial owner”, amended Subsec. (b)(2)(A) by adding “or, in the case of an offer made pursuant to subdivision (10) of section 33-817, the date of such offer”, amended Subsec. (b)(2)(B) by replacing provision re day before effective date of corporate action with provision re day before consummation of corporate action or effective date of amendment of certificate of incorporation, amended Subsec. (b)(3)(B) by replacing “proprietary interests” with “proprietary interests received in the disposition”, amended Subsec. (c) by adding Subdiv. (1) re no limitation or elimination effective if class or series does not have right to vote separately as voting group, alone or as part of group on action designating existing provisions re limitation or elimination contained in amendment to certificate of incorporation as Subdiv. (2), and made technical changes.