Dissenting shareholders' rights.

Existing law, the General Corporation Law, provides for the formation and governance of general corporations, including the rights of shareholders of a corporation who dissent from approving a reorganization or short-form merger. Existing law provides that a holder of dissenting shares, as defined, who complies with certain procedures under specified circumstances is entitled to receive from the corporation the fair market value of the holder's shares, as defined, determined as of the day before the first announcement of the terms of the transaction. Existing law provides that holders of publicly traded shares are only eligible to receive the fair market value of their shares if demands for payment are filed with respect to 5% or more of the class of shares. Existing law requires that a corporation give specified notice to shareholders of a subsidiary corporation regarding a merger of the subsidiary corporation if all of the corporate shares of the subsidiary corporation are not owned by the parent corporation. This bill would provide that the fair market value of dissenting shares shall be determined as of the day of, and immediately prior to, the first announcement of the terms of the proposed transaction, subject to adjustment as specified. The bill would eliminate the provision making holders of publicly traded shares only eligible to receive the fair market value of their dissenting shares if 5% or more of the shares are dissenting shares. The bill would make conforming changes. The bill would require a dissenting shareholder who demands that the corporation purchase his or her shares to include a statement of what the shareholder claims is the fair market value of those shares and that statement would constitute an offer by the shareholder to sell the shares at that price. Existing law defines "dissenting shares" for purposes of these provisions to exclude publicly traded shares, except as specified. This bill would modify the definition of "dissenting shares" to include publicly traded shares for which the holder is entitled to anything except publicly traded shares of another corporation or cash in lieu of fractional shares, or a combination of those shares and that cash.