n SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - An introduction to the appraisal remedy as proposed in the Companies Bill : triggering actions and the differences between the appraisal remedy and existing shareholder remedies




It is widely known that the affairs of a company are decided by the majority of shareholder votes in that company. Although some matters that are voted on may be inconsequential, others may involve changes disadvantageous to dissenting shareholders. The obvious solution for these shareholders, once majority rule prevails, is to sell their shares, but there is not always a ready market. In some jurisdictions, therefore, minority shareholders are given the right to be bought out by their companies if they disagree with resolutions approving certain fundamental changes. This right to be bought out is known as an appraisal right, a dissent right or a buy-out right, and will be referred to in this article as the appraisal remedy. Consequently, the appraisal remedy is defined as the right of a dissenting shareholder to force his company to purchase his shares at either a mutually satisfactory or a judicially set fair price if his company takes certain triggering actions.


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