Appraisal During Crisis

The Harvard Law School Forum on Corporate Governance and Financial Regulation has published a post by authors Professor Yair Listokin and Mr. Inho Andrew Mun, regarding corporate law in a financial crisis. Reviewing the crisis in 2008 and the rescue mergers that occurred, the authors propose that during a financial crisis, corporate law changes–in particular with respect to mergers. By replacing voting rights with appraisal rights, the authors propose that the efficiency gains pre-merger, whereby crisis actors would be able to move with more alacrity and fewer technical issue holdups, would be balanced by the protection of shareholder rights post-merger: by appraisal.

The authors certainly hit upon a basic reality: Appraisal rights remain a viable protection for shareholder interests and rights, and are one of the few post-merger remedies that exist. The authors’ idea to apply what would effectively be “super-appraisal” in a crisis–collapsing pre-merger remedies into the post-merger appraisal remedy–is certainly an innovative suggestion.

The article is available here.