For dissenting shareholders, on what date is the basis for payment determined?

For dissenting shareholders, on what date is the basis for payment determined?

• A. The date of the sale
• B. The day prior to the vote, inclusive of appreciation or depreciation
• C. The date the dissenting shareholder surrenders the shares
• D. The date of the corporate action

Answer: (B)

Dissenters’ rights are designed to give fair value for their shares based on the market value just before the corporate action goes forward. The date used is the day prior to the vote on the action, so the payment basis captures the value that existed before the action could influence prices. This prevents post-announcement or post-action fluctuations from distorting the amount owed and ensures the price reflects the pre-action market value. Any appreciation or depreciation that occurs up to that day is included, but movements after that point are not part of the valuation. Choosing the sale date would anchor value to a transaction time that isn’t tied to the decision to proceed with the action. The date the shareholder surrenders the shares is about timing of surrender, not the fair value at which the shares are to be paid. The date of the corporate action itself would reflect the effects of the action, not the pre-action value the dissenters are entitled to.

Dissenters’ rights are designed to give fair value for their shares based on the market value just before the corporate action goes forward. The date used is the day prior to the vote on the action, so the payment basis captures the value that existed before the action could influence prices. This prevents post-announcement or post-action fluctuations from distorting the amount owed and ensures the price reflects the pre-action market value. Any appreciation or depreciation that occurs up to that day is included, but movements after that point are not part of the valuation.

Choosing the sale date would anchor value to a transaction time that isn’t tied to the decision to proceed with the action. The date the shareholder surrenders the shares is about timing of surrender, not the fair value at which the shares are to be paid. The date of the corporate action itself would reflect the effects of the action, not the pre-action value the dissenters are entitled to.