(1) A shareholder of a domestic corporation is entitled to appraisal rights, and to obtain payment of the fair value of that shareholder’s shares, in the event of any of the following corporate actions:
(a) Consummation of a domestication or a conversion of such corporation pursuant to s. 607.11921 or s. 607.11932, as applicable, if shareholder approval is required for the domestication or the conversion;
(b) Consummation of a merger to which such corporation is a party:
1. If shareholder approval is required for the merger under s. 607.1103 or would be required but for s. 607.11035, except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares of any class or series that remains outstanding after consummation of the merger where the terms of such class or series have not been materially altered; or
2. If such corporation is a subsidiary and the merger is governed by s. 607.1104;
(c) Consummation of a share exchange to which the corporation is a party as the corporation whose shares will be acquired, except that appraisal rights shall not be available to any shareholder of the corporation with respect to any class or series of shares of the corporation that is not acquired in the share exchange;
(d) Consummation of a disposition of assets pursuant to s. 607.1202 if the shareholder is entitled to vote on the disposition, except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares or any class or series if:
1. Under the terms of the corporate action approved by the shareholders there is to be distributed to shareholders in cash the corporation’s net assets, in excess of a reasonable amount reserved to meet claims of the type described in ss. 607.1406 and 607.1407, within 1 year after the shareholders’ approval of the action and in accordance with their respective interests determined at the time of distribution; and
2. The disposition of assets is not an interested transaction;
(e) An amendment of the articles of incorporation with respect to a class or series of shares which reduces the number of shares of a class or series owned by the shareholder to a fraction of a share if the corporation has the obligation or the right to repurchase the fractional share so created;
(f) Any other merger, share exchange, disposition of assets, or amendment to the articles of incorporation, in each case to the extent provided as of the record date by the articles of incorporation, bylaws, or a resolution of the board of directors providing for appraisal rights, except that no bylaw or board resolution providing for appraisal rights may be amended or otherwise altered except by shareholder approval;
(g) An amendment to the articles of incorporation or bylaws of a corporation, the effect of which is to adversely affect the interest of the shareholder by altering or abolishing appraisal rights under this section;
(h) With regard to a class of shares prescribed in the articles of incorporation in any corporation as to which that particular class of shares was in existence prior to October 1, 2003, including any shares within that class subsequently authorized by amendment, and for classes of shares authorized on or after October 1, 2003, in any corporation with 100 or fewer shareholders, any amendment of the articles of incorporation if the shareholder is entitled to vote on the amendment and if such amendment would adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of his, her, or its shares;
2. Altering or abolishing the voting rights pertaining to any of his, her, or its shares, except as such rights may be affected by the voting rights of new shares then being authorized of any existing or new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of his, her, or its shares, when such exchange, cancellation, or reclassification would alter or abolish the shareholder’s voting rights or alter his, her, or its percentage of equity in the corporation, or effecting a reduction or cancellation of accrued dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of the shareholder’s redeemable shares, altering or abolishing any provision relating to any sinking fund for the redemption or purchase of any of his, her, or its shares, or making any of his, her, or its shares subject to redemption when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of the shareholder’s preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of the shareholder’s preferred shares; or
7. Reducing any stated preferential amount payable on any of the shareholder’s preferred shares upon voluntary or involuntary liquidation;
(i) An amendment of the articles of incorporation of a social purpose corporation to which s. 607.504 or s. 607.505 applies;
(j) An amendment of the articles of incorporation of a benefit corporation to which s. 607.604 or s. 607.605 applies;
(k) A merger, domestication, conversion, or share exchange of a social purpose corporation to which s. 607.504 applies; or
(l) A merger, domestication, conversion, or share exchange of a benefit corporation to which s. 607.604 applies.
(2) Notwithstanding subsection (1), the availability of appraisal rights under paragraphs (1)(a), (b), (c), (d), (e), (f), and (h) shall be limited in accordance with the following provisions:
(a) Appraisal rights shall not be available for the holders of shares of any class or series of shares which is:
1. A covered security under s. 18(b)(1)(A) or (B) of the Securities Act of 1933;
2. Not a covered security, but traded in an organized market (or subject to a comparable trading process) and has at least 2,000 shareholders and the outstanding shares of such class or series have a market value of at least $20 million, exclusive of the value of outstanding shares held by the corporation’s subsidiaries, by the corporation’s senior executives, by the corporation’s directors, and by the corporation’s beneficial shareholders and voting trust beneficial owners owning more than 10 percent of the outstanding shares; or
3. Issued by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and which may be redeemed at the option of the holder at net asset value.
(b) The applicability of paragraph (a) shall be determined as of:
1. The record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders to act upon the corporate action requiring appraisal rights, the record date fixed to determine the shareholders entitled to sign a written consent approving the corporate action requiring appraisal rights, or, in the case of an offer made pursuant to s. 607.11035, the date of such offer; or
2. If there will be no meeting of shareholders, no written consent approving the corporate action, and no offer made pursuant to s. 607.11035, the close of business on the day before the consummation of the corporate action or the effective date of the amendment of the articles, as applicable.
(c) Paragraph (a) is not applicable and appraisal rights shall be available pursuant to subsection (1) for the holders of any class or series of shares where the corporate action is an interested transaction.
(d) For the purposes of subparagraph (a)2., a comparable trading process exists if:
1. The market price of the corporation’s shares is determined at least quarterly based on an independent valuation and by following a formalized process that is designed to determine a value for the corporation’s shares that is comparable to the value of comparable publicly traded companies; and
2. The corporation repurchases the shares at the price set by its board of directors based upon the independent valuation and subject to certain terms and conditions established by the corporation and provides the corporation’s shareholders with a trading market comparable to that typically available had the corporation’s shares been traded in an organized market.
(3) Notwithstanding any other provision of this section, the articles of incorporation as originally filed or any amendment to the articles of incorporation may limit or eliminate appraisal rights for any class or series of preferred shares, except that:
(a) No such limitation or elimination shall be effective if the class or series does not have the right to vote separately as a voting group, alone or as part of a group, on the action or if the action is a domestication under s. 607.11920 or a conversion under s. 607.11930, or a merger having a similar effect as a domestication or conversion in which the domesticated eligible entity or the converted eligible entity is an eligible entity; and
(b) Any such limitation or elimination contained in an amendment to the articles of incorporation that limits or eliminates appraisal rights for any of such shares that are outstanding immediately before the effective date of such amendment or that the corporation is or may be required to issue or sell thereafter pursuant to any conversion, exchange, or other right existing immediately before the effective date of such amendment shall not apply to any corporate action that becomes effective within 1 year after the effective date of such amendment if such action would otherwise afford appraisal rights.
Cited 18 times | Published | Florida 2nd District Court of Appeal | 1999 WL 445693
...tion 607.1202(4), regarding sales or exchanges of all or substantially all of corporate assets outside the regular course of business. Dissenters' rights may also be created by the adoption of certain amendments to the articles of incorporation. See § 607.1302(1)(e), Fla....
...S would be converted to one share of FFS. Fractional shares would be repurchased. Because M/S each owned 200,000 shares, their shares would be repurchased as fractional shares. The reverse stock split triggered M/S's statutory appraisal rights under section 607.1302(1)(d), Florida Statutes, which entitles a shareholder whose stock is being repurchased in a reverse split to appraisal rights and to obtain payment of the fair market value of the stock. Section 607.1322(1), Florida Statutes, provides: "If proposed corporate action requiring appraisal rights under s. 607.1302(1) becomes effective, the corporation must deliver" to all shareholders "a written appraisal notice and form." Accordingly, FFS mailed M/S written notice on April 8, 2008, which included the details of the reverse stock split, cited the a...
...t to obtain a judicial determination regarding the fairness of the price and procedure by which the company determined the price. A company which implements a reverse stock split must provide minority shareholders notice of the appraisal rights. See § 607.1302(1)(d), Fla....
...However, "[a] shareholder entitled to appraisal rights under this chapter may ... challenge a completed corporate action for which appraisal rights are available" where the corporate action "[w]as procured as a result of fraud or material misrepresentation." § 607.1302(4)(b), Fla....
...The trial court granted Stanford's motion for summary judgment as to all claims relating to the merger, concluding that the brothers had no remedy after having waived the appraisal process. The Williams court held that summary judgment was inappropriate because the brothers had a viable claim under section 607.1302(4)(b)....
Cited 10 times | Published | Florida 2nd District Court of Appeal | 2004 WL 1057824
...he Citigroup Sale transaction was limited to IMC shareholders of record on September 17, 1999, a purchaser of IMC shares in the OTCBB market on November 11, 1999 would not be entitled to dissent and be paid "fair value" for his shares. Fla. Statutes § 607.1302(b) [sic]....
Cited 7 times | Published | Florida 4th District Court of Appeal
...Appellant also alleged that
material calculations were omitted in arriving at a sale price, and that
minority shareholders were not fully informed with respect to the material
details of the transaction. Appellant refused the near exclusive statutory
remedy of an independent appraisal pursuant to section 607.1302, Florida
Statutes (2016). Instead, she contended that she qualified for the statute’s
limited exception to appraisal set forth in section 607.1302(4)(b)
(discussed below), and sought equitable relief from the courts....
...While
we must accept the facts alleged as true and make all reasonable
inferences in favor of the pleader, id., conclusory allegations are
insufficient. Shands Teaching Hosp. and Clinics, Inc. v. Estate of Lawson
ex rel. Lawson, 175 So. 3d 327, 331 (Fla. 1st DCA 2015) (en banc).
“Section 607.1302, Florida Statutes (2003)—Florida’s ‘appraisal rights’
statute—generally requires minority shareholders who dissent from a
major transaction or disposition of assets to seek the remedy of tendering
2
their shares for appraisal and buy-back at a fair price . . . .” Williams, 977
So. 2d at 726-27. The statute aids the courts from becoming “bogged down
in a wide range of disputes over the fairness of cash-out prices.” Id. at
729. This includes mergers. § 607.1302(1)(a), (e), Fla....
...(2016).
“A shareholder entitled to appraisal rights . . . may not challenge a
completed corporate action for which appraisal rights are available unless
such corporate action: . . . (b) [w]as procured as a result of fraud or
material misrepresentation.” § 607.1302(4)....
...wherein she would be “entitled to the same discovery rights as parties in
other civil proceedings.” Foreclosure FreeSearch, 12 So. 3d at 776 (quoting
§ 607.1330(4), Fla. Stat.).
Conclusion
Attempting to invoke section 607.1302(4)(b), Appellant’s complaint
baldly asserts that the offer to the shareholders “[w]as procured as a result
of fraud or material misrepresentation.” We agree with the trial court’s
well-articulated and supported order which co...
Cited 4 times | Published | Florida 1st District Court of Appeal | 2008 WL 762483
...f B & S, the firm's corporate client. We conclude that appellants raise allegations which, if true, are sufficient to trigger remedial rights beyond mere appraisal. Accordingly, these allegations withstand appellees' motions for summary judgment. A. Section 607.1302, Florida Statutes (2003) Florida's "appraisal rights" statute *727 generally requires minority shareholders who dissent from a major transaction or disposition of assets to seek the remedy of tendering their shares for appraisa...
...he extent provided by the articles of incorporation, bylaws, or a resolution of the board of directors, except that no bylaw or board resolution providing for appraisal rights may be amended or otherwise altered except by shareholder approval. . . . § 607.1302(1), Fla....
..."`[F]air value' means the value of the corporation's shares determined: (a) Immediately before the effectuation of the corporate action to which the shareholder objects." § 607.1301(4)(a), Fla. Stat. (2003). The trigger here is Mr. Stanford's disposition of all B & S assets. See § 607.1302(1)(d), Fla....
...In most cases, the statute denominates appraisal as a dissenting shareholder's exclusive remedy. See id. The exclusivity rule does not apply, however, where the minority shareholder has alleged that the challenged transaction "[w]as procured as a result of fraud or material misrepresentation." § 607.1302(4)(b), Fla....
...We reject the concept, implicit in appellees' argument, that a buy-back at the fair value of the stock immediately before the Stanfords' disposition of corporate assets would suffice as a complete remedy. B. To date, no Florida court has had occasion to interpret the governing provisions of section 607.1302 in its 2003 form....
...Nat'l Cash Credit Ass'n, 156 A. 183, 187-88 (Del.Ch.1931)). Beyond the Delaware Supreme Court's exposition of persuasive common law tenets, we note that a Delaware chancery court has now applied the Weinberger-Rabkin framework to its own construction of the 2003 version of section 607.1302(4)(b), Florida Statutes (2003)....
...The Delaware chancellor interpreted the Florida statutory phrase "fraud or material misrepresentation" as implicating the same entire-fairness analysis contemplated in Weinberger and Rabkin. Id. at 1171. We are inclined to align our interpretation of section 607.1302(4)(b) with that of the Berger court, which interpreted the phrase "fraud or material misrepresentation" in the statute essentially synonymously with "unfair dealing." Id....
...Moreover, we are unable to conclude that appellees' alleged mismanagement and misappropriations of corporate funds, followed by a de facto merger, not only triggered the appraisal right, but also cemented that right as the Williamses' sole remedy. See § 607.1302(1)(c), Fla....
...Rabkin and Weinberger one so procedurally and structurally unfair that a fair price would be unattainable without independent equitable relief outside an appraisal proceeding. D. We interpret the "fraud or material misrepresentation" exception in section 607.1302(4)(b) to mean that a minority shareholder who alleges specific' acts of "fraud, misrepresentation, self-dealing, [or] deliberate waste of corporate assets," Weinberger, 457 A.2d at 714, may be entitled to equitable remedies beyond an...
Cited 1 times | Published | District Court, S.D. Florida
...This is because § 607.1202 does not provide for after-the-fact relief against a third-party purchaser. Indeed, subsection (4) of the statute provides that dissenting shareholders have only the right to be paid the value of their shares. Furthermore, Fla. Stat. § 607.1302(5) as it existed at the relevant time stated that a shareholder entitled to dissent could not "challenge the corporate action ......
...e term or statute,
courts often look to Delaware law. See Williams v. Stanford, 977 So. 2d
722, 727 (Fla. 1st DCA 2008) (“To date, no Florida court has had occasion
4
to interpret the governing provisions of section 607.1302 in its 2003 form.
As is often true, however, Delaware case law provides guidance to our
construction of the statute[.]”); Int’l Ins....
...This is because § 607.1202 does not provide for after-the-fact relief against a third-party purchaser. Indeed, subsection (4) of the statute provides that dissenting shareholders have only the right to be paid the value of their shares. Furthermore, Fla. Stat. § 607.1302 (5)—as it existed at the relevant time—stated that a shareholder entitled to dissent could not “challenge the corporate action ......
...ach of fiduciary
duty claim in a derivative action against James, Alexis, and Smart
Communications US. In August 2017, the action was dismissed for lack
of prosecution. Also in 2016, Smart Communications US filed an action
seeking an appraisal under section 607.1302, Florida Statutes, after
Engelke asserted his statutory appraisal rights and demanded payment
for his share of Smart Communications US....
...He seeks to reverse
the trial court’s conclusions and to be installed as Alex Omes’s replacement as
President of UEI.
The Estate P.R. argues in this appeal that the MOU is in reality a shareholder
agreement. The trial court rejected that argument, as do we. The MOU is not,
according to section 607.1302(4), Florida Statutes (2016), an article of
incorporation, bylaw, or a board of director’s resolution....
This Florida statute resource is curated by Graham W. Syfert, Esq., a Jacksonville, Florida personal injury and workers' compensation attorney. For legal consultation, call 904-383-7448.
