Acme Corp. made a public offering of its shares. Stein bought 100 shares at $10 each. Three months later, Acme announced that it planned to merge with another company. Under the terms of the merger, Acme shareholders would receive $14 per share, which was $1 more than the market price on the day prior to the announcement. Acme's shareholders approved the merger. Stein did not vote for or against the merger, but he turned in his shares and received $14 for each share. Stein later argued that Acme's directors acted improperly in approving the merger. He also believed the price he and other shareholders received was grossly inadequate. Will Stein be able to enforce his appraisal rights?

Question

What will be an ideal response?

Answer 1

In accordance with the Model Business Corporation Act's limitations on the appraisal rights of shareholders, Stein cannot enforce his rights. His exclusive method of objecting to the merger was to seek dissenters' rights, which he failed to do. If he did not agree with the merger, he should have notified the corporation of his intent to vote against it before the actual vote took place and he should have participated in the actual vote. Since he did not exercise his right to dissent by way of a vote, he cannot obtain appraisal now.