While there are many areas of appraisal up for debate, and actively being debated in the Delaware courts, sometimes there’s an easy one. When a company engages in a merger, under the DGCL, the Company must timely notify shareholders of their appraisal rights if those rights exist. What a company cannot do – as its alleged the Defendant in Anurag Mehta v. Mobile Posse Inc. et al. did – is conduct a merger in secret, complete with an alleged a failure to inform shareholders of their appraisal rights. (Case number 2018-0355, in the Court of Chancery of the State of Delaware).
Appraisal notices are critical to shareholders, especially in smaller or more closely held entities, as the shareholders may not have full information about whether the corporate action at issue triggers their appraisal rights. (And sometimes even the lawyers allegedly get it wrong.)
By timely including an appraisal notice, or a statement that appraisal rights are unavailable, the Company both fulfills its statutory duty and also serves its shareholders. Here, Mobile Posse is alleged to have failed in that – in part, by including incorrect appraisal information in its supplemental notice of the merger, rendering the whole supplement incorrect. Sometimes we have to go back to basics: getting the appraisal notice right.
Read more about the Mobile Posse case at Law360 [$$$].