13.1-730 - Right to appraisal. - Virginia Statutes

§ 13.1-730. Right to appraisal.

A. A shareholder is entitled to appraisal rights, and to obtain payment ofthe fair value of that shareholder's shares, in the event of any of thefollowing corporate actions:

1. Consummation of a merger to which the corporation is a party (i) ifshareholder approval is required for the merger by § 13.1-718, except thatappraisal rights shall not be available to any shareholder of the corporationwith respect to shares of any class or series that remain outstanding afterconsummation of the merger, or (ii) if the corporation is a subsidiary andthe merger is governed by § 13.1-719;

2. Consummation of a share exchange to which the corporation is a party asthe corporation whose shares will be acquired, except that appraisal rightsshall not be available to any shareholder of the corporation with respect toany class or series of shares of the corporation that is not exchanged;

3. Consummation of a disposition of assets pursuant to § 13.1-724 if theshareholder is entitled to vote on the disposition;

4. An amendment of the articles of incorporation with respect to a class orseries of shares that reduces the number of shares of a class or series ownedby the shareholder to a fraction of a share if the corporation has theobligation or right to repurchase the fractional share so created; or

5. Any other amendment to the articles of incorporation, or any other merger,share exchange or disposition of assets to the extent provided by thearticles of incorporation, bylaws or a resolution of the board of directors.

B. Notwithstanding subsection A, the availability of appraisal rights undersubdivisions A 1 through A 4 shall be limited in accordance with thefollowing provisions:

1. Appraisal rights shall not be available for the holders of shares of anyclass or series of shares that is:

a. A covered security under § 18(b) (1) (A) or (B) of the federal SecuritiesAct of 1933, as amended;

b. Traded in an organized market and has at least 2,000 shareholders and amarket value of at least $20 million, exclusive of the value of such sharesheld by the corporation's subsidiaries, senior executives, directors andbeneficial shareholders owning more than 10 percent of such shares; or

c. Issued by an open end management investment company registered with theUnited States Securities and Exchange Commission under the Investment CompanyAct of 1940 and may be redeemed at the option of the holder at net assetvalue.

2. The applicability of subdivision 1 of this subsection shall be determinedas of:

a. The record date fixed to determine the shareholders entitled to receivenotice of the meeting of shareholders to act upon the corporate actionrequiring appraisal rights; or

b. The day before the effective date of such corporate action if there is nomeeting of shareholders.

3. Subdivision 1 of this subsection shall not be applicable and appraisalrights shall be available pursuant to subsection A for the holders of anyclass or series of shares who are required by the terms of the corporateaction requiring appraisal rights to accept for such shares anything otherthan 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 thestandards set forth in subdivision 1 of this subsection at the time thecorporate action becomes effective.

4. Subdivision 1 of this subsection shall not be applicable and appraisalrights shall be available pursuant to subsection A for the holders of anyclass or series of shares where the corporate action is an interestedtransaction.

C. Notwithstanding any other provision of this section, the articles ofincorporation as originally filed or any amendment thereto may limit oreliminate appraisal rights for any class or series of preferred shares, butany such limitation or elimination contained in an amendment to the articlesof incorporation that limits or eliminates appraisal rights for any of suchshares that are outstanding immediately prior to the effective date of suchamendment or that the corporation is or may be required to issue or sellthereafter pursuant to any conversion, exchange or other right existingimmediately before the effective date of such amendment shall not apply toany corporate action that becomes effective within one year of that date ifsuch action would otherwise afford appraisal rights.

(Code 1950, §§ 13-85, 13.1-75, 13.1-78; 1956, c. 428; 1968, c. 733; 1972, c.425; 1975, c. 500; 1984, c. 613; 1985, c. 522; 1986, c. 540; 1988, c. 442;1990, c. 229; 1992, c. 575; 1996, c. 246; 1999, c. 288; 2005, c. 765; 2007,c. 165; 2010, c. 782.)