We’ve covered South African appraisal rights before, including the mechanics of appraisal, results from that jurisdiction, and the reach of the statute. In a new journal article in the South Africa Law Journal, Professor Maleka Femida Cassim discusses the divergent approaches of two South African High Court cases to the interpretation of “fair value.” The journal article mentioned [$$] heavily discusses two significant South African cases, linked here and here for ease of reference.

Why is South Africa the most interesting appraisal jurisdiction at the moment? South African appraisal is ‘young’ compared to Delaware appraisal. The South African appraisal remedy springs from Section 164 of the Companies act of 2008. But in a relatively short period of time the caselaw on Section 164 has developed quickly and has done so while often considering both the logic and result of decisions from other jurisdictions, including Delaware and the Cayman Islands (with references to Canadian, Australian and New Zealand appraisal rights as well).

South African courts are wrestling with the bedrock questions that Delaware courts were confronted when appraisal was a younger remedy in the “First State” (and Delaware courts sometimes still wrestle with these foundational questions on occasion). Issues such as how to define fair value, is the merger price relevant (or dispositive), how are market distortions to be accounted for, should the Court seek the assistance of a neutral expert, what discounts or premia need to be applied, is appraisal arbitrage allowed, and many more, come through in the caselaw.

There is the added complication that though the South African appraisal remedy (like the Cayman remedy) was modeled on Delaware law, that does not make Delaware jurisprudence on the issue anything more than persuasive. (This is true, as we saw, when the Privy Council, reviewing Cayman law, has held that Delaware authorities on minority discount are not the law of the Cayman Islands.)

South African courts are thus writing fair value law with the benefit of, but not controlled by, bodies of jurisprudence both to learn from but also critically examine.

*RKS does not practice outside the United States and presents this information for educational purposes only. For legal issues, consult a licensed professional in your relevant jurisdiction.