VII.
(10%)
In a stockholders’ meeting, S dissented from the corporate act converting preferred voting shares to nonvoting shares. Thereafter, S submitted his certificates of stock for notation that his shares are dissenting. The next day, S transferred his shares to T to whom new certificates were issued. Now, T demands from the corporation the payment of the value of his shares.
(a) What is the meaning of a stockholder’s appraisal right?
(b) Can T exercise the right of appraisal? Reason briefly.
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VII.
a.
Stockholder’s appraisal right means the right of a stockholder, in cases provided by law, to demand payment of the fair value of his shares after dissenting from a proposed corporate action.
b.
T cannot exercise his right of appraisal with respect to the corporate act of converting preferred voting shares to non-voting shares. Said appraisal right was personal to S and was not transferred to T when the latter bought the dissenting shares. The appraisal right was terminated because of the transfer. Besides, if T does not agree to said corporate act, he should not have bought the dissenting shares.
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