Delaware Bar Approves Amendments To Prevent Abuse of Appraisal Statute

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By Michael Greene

March 19 — The Delaware State Bar Association has green-lighted two proposed amendments to Delaware's appraisal statute.

The Executive Committee of the Bar approved the modifications to Delaware General Corporation Law §262 March 19, less than a week after it was approved by the Corporation Law Section, according to Norman Monhait, chairman of the section and shareholder with Rosenthal, Monhait & Goddess, P.A.

The proposed amendments—designed to address concerns that the appraisal stature is being abused—still need a legislative sponsor to introduce them before the Delaware General Assembly can vote on them.

Two Modifications

The first modification seeks to eliminate “nuisance” appraisal claims by creating a de minimis exception that would limit such claims in public company transactions.

The second modification would provide corporations with the option of limiting the accrual of interest on appraisal awards.

According to a Delaware News-Journal report, Dole Food Company Inc. has suggested that it would consider moving out of the state if the legislature does not act to address concerns over abusive appraisal-related litigation. Dole has been mired in several recent cases related to §262.

Fee-Shifting

The council also introduced amendments related to exclusive forum selection provisions and fee-shifting bylaws in the March 6 package. The fee-shifting and forum selection proposals are expected to be considered at a section meeting to be scheduled in early April.

The FAQs that accompanied the council's proposals state: “These appraisal measures, together with the forum selection provisions, should provide significant relief to corporations that believe that they are being victimized by abusive litigation tactics.”

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

The proposed appraisal amendments are available at http://op.bna.com/car.nsf/r?Open=mgre-9ufsbs.

A summary of the proposed appraisal amendment is available at http://op.bna.com/car.nsf/r?Open=mgre-9ufseh.

The FAQs on the proposed amendments are available at http://op.bna.com/car.nsf/r?Open=mgre-9ufs9w.