2010 California Code
Corporations Code
Chapter 13. Dissenters' Rights

CORPORATIONS CODE
SECTION 1300-1313



1300.  (a) If the approval of the outstanding shares (Section 152)
of a corporation is required for a reorganization under subdivisions
(a) and (b) or subdivision (e) or (f) of Section 1201, each
shareholder of the corporation entitled to vote on the transaction
and each shareholder of a subsidiary corporation in a short-form
merger may, by complying with this chapter, require the corporation
in which the shareholder holds shares to purchase for cash at their
fair market value the shares owned by the shareholder which are
dissenting shares as defined in subdivision (b). The fair market
value shall be determined as of the day before the first announcement
of the terms of the proposed reorganization or short-form merger,
excluding any appreciation or depreciation in consequence of the
proposed action, but adjusted for any stock split, reverse stock
split, or share dividend which becomes effective thereafter.
   (b) As used in this chapter, "dissenting shares" means shares
which come within all of the following descriptions:
   (1) Which were not immediately prior to the reorganization or
short-form merger listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o)
of Section 25100, and the notice of meeting of shareholders to act
upon the reorganization summarizes this section and Sections 1301,
1302, 1303 and 1304; provided, however, that this provision does not
apply to any shares with respect to which there exists any
restriction on transfer imposed by the corporation or by any law or
regulation; and provided, further, that this provision does not apply
to any class of shares if demands for payment are filed with respect
to 5 percent or more of the outstanding shares of that class.
   (2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not
voted in favor of the reorganization or, (B) if described in
paragraph (1) (without regard to the provisos in that paragraph),
were voted against the reorganization, or were held of record on the
effective date of a short-form merger; provided, however, that
subparagraph (A) rather than subparagraph (B) of this paragraph
applies in any case where the approval required by Section 1201 is
sought by written consent rather than at a meeting.
   (3) Which the dissenting shareholder has demanded that the
corporation purchase at their fair market value, in accordance with
Section 1301.
   (4) Which the dissenting shareholder has submitted for
endorsement, in accordance with Section 1302.
   (c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of
record.



1301.  (a) If, in the case of a reorganization, any shareholders of
a corporation have a right under Section 1300, subject to compliance
with paragraphs (3) and (4) of subdivision (b) thereof, to require
the corporation to purchase their shares for cash, that corporation
shall mail to each such shareholder a notice of the approval of the
reorganization by its outstanding shares (Section 152) within 10 days
after the date of that approval, accompanied by a copy of Sections
1300, 1302, 1303, and 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of
the dissenting shares, and a brief description of the procedure to be
followed if the shareholder desires to exercise the shareholder's
right under those sections. The statement of price constitutes an
offer by the corporation to purchase at the price stated any
dissenting shares as defined in subdivision (b) of Section 1300,
unless they lose their status as dissenting shares under Section
1309.
   (b) Any shareholder who has a right to require the corporation to
purchase the shareholder's shares for cash under Section 1300,
subject to compliance with paragraphs (3) and (4) of subdivision (b)
thereof, and who desires the corporation to purchase shares shall
make written demand upon the corporation for the purchase of those
shares and payment to the shareholder in cash of their fair market
value. The demand is not effective for any purpose unless it is
received by the corporation or any transfer agent thereof (1) in the
case of shares described subdivision (b) of Section 1300 (without
regard to the provisos in that paragraph), not later than the date of
the shareholders' meeting to vote upon the reorganization, or (2) in
any other case within 30 days after the date on which the notice of
the approval by the outstanding shares pursuant to subdivision (a) or
the notice pursuant to subdivision (i) of Section 1110 was mailed to
the shareholder.
   (c) The demand shall state the number and class of the shares held
of record by the shareholder which the shareholder demands that the
corporation purchase and shall contain a statement of what that
shareholder claims to be the fair market value of those shares as of
the day before the announcement of the proposed reorganization or
short-form merger. The statement of fair market value constitutes an
offer by the shareholder to sell the shares at that price.



1302.  Within 30 days after the date on which notice of the approval
by the outstanding shares or the notice pursuant to subdivision (i)
of Section 1110 was mailed to the shareholder, the shareholder shall
submit to the corporation at its principal office or at the office of
any transfer agent thereof, (a) if the shares are certificated
securities, the shareholder's certificates representing any shares
which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting
shares or to be exchanged for certificates of appropriate
denomination so stamped or endorsed or (b) if the shares are
uncertificated securities, written notice of the number of shares
which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the
corporation, the new certificates, initial transaction statement, and
other written statements issued therefor shall bear a like
statement, together with the name of the original dissenting holder
of the shares.



1303.  (a) If the corporation and the shareholder agree that the
shares are dissenting shares and agree upon the price of the shares,
the dissenting shareholder is entitled to the agreed price with
interest thereon at the legal rate on judgments from the date of the
agreement. Any agreements fixing the fair market value of any
dissenting shares as between the corporation and the holders thereof
shall be filed with the secretary of the corporation.
   (b) Subject to the provisions of Section 1306, payment of the fair
market value of dissenting shares shall be made within 30 days after
the amount thereof has been agreed or within 30 days after any
statutory or contractual conditions to the reorganization are
satisfied, whichever is later, and in the case of certificated
securities, subject to surrender of the certificates therefor, unless
provided otherwise by agreement.



1304.  (a) If the corporation denies that the shares are dissenting
shares, or the corporation and the shareholder fail to agree upon the
fair market value of the shares, then the shareholder demanding
purchase of such shares as dissenting shares or any interested
corporation, within six months after the date on which notice of the
approval by the outstanding shares (Section 152) or notice pursuant
to subdivision (i) of Section 1110 was mailed to the shareholder, but
not thereafter, may file a complaint in the superior court of the
proper county praying the court to determine whether the shares are
dissenting shares or the fair market value of the dissenting shares
or both or may intervene in any action pending on such a complaint.
   (b) Two or more dissenting shareholders may join as plaintiffs or
be joined as defendants in any such action and two or more such
actions may be consolidated.
   (c) On the trial of the action, the court shall determine the
issues. If the status of the shares as dissenting shares is in issue,
the court shall first determine that issue. If the fair market value
of the dissenting shares is in issue, the court shall determine, or
shall appoint one or more impartial appraisers to determine, the fair
market value of the shares.


1305.  (a) If the court appoints an appraiser or appraisers, they
shall proceed forthwith to determine the fair market value per share.
Within the time fixed by the court, the appraisers, or a majority of
them, shall make and file a report in the office of the clerk of the
court. Thereupon, on the motion of any party, the report shall be
submitted to the court and considered on such evidence as the court
considers relevant. If the court finds the report reasonable, the
court may confirm it.
   (b) If a majority of the appraisers appointed fail to make and
file a report within 10 days from the date of their appointment or
within such further time as may be allowed by the court or the report
is not confirmed by the court, the court shall determine the fair
market value of the dissenting shares.
   (c) Subject to the provisions of Section 1306, judgment shall be
rendered against the corporation for payment of an amount equal to
the fair market value of each dissenting share multiplied by the
number of dissenting shares which any dissenting shareholder who is a
party, or who has intervened, is entitled to require the corporation
to purchase, with interest thereon at the legal rate from the date
on which judgment was entered.
   (d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated
securities, only upon the endorsement and delivery to the corporation
of the certificates for the shares described in the judgment. Any
party may appeal from the judgment.
   (e) The costs of the action, including reasonable compensation to
the appraisers to be fixed by the court, shall be assessed or
apportioned as the court considers equitable, but, if the appraisal
exceeds the price offered by the corporation, the corporation shall
pay the costs (including in the discretion of the court attorneys'
fees, fees of expert witnesses and interest at the legal rate on
judgments from the date of compliance with Sections 1300, 1301 and
1302 if the value awarded by the court for the shares is more than
125 percent of the price offered by the corporation under subdivision
(a) of Section 1301).



1306.  To the extent that the provisions of Chapter 5 prevent the
payment to any holders of dissenting shares of their fair market
value, they shall become creditors of the corporation for the amount
thereof together with interest at the legal rate on judgments until
the date of payment, but subordinate to all other creditors in any
liquidation proceeding, such debt to be payable when permissible
under the provisions of Chapter 5.



1307.  Cash dividends declared and paid by the corporation upon the
dissenting shares after the date of approval of the reorganization by
the outstanding shares (Section 152) and prior to payment for the
shares by the corporation shall be credited against the total amount
to be paid by the corporation therefor.


1308.  Except as expressly limited in this chapter, holders of
dissenting shares continue to have all the rights and privileges
incident to their shares, until the fair market value of their shares
is agreed upon or determined. A dissenting shareholder may not
withdraw a demand for payment unless the corporation consents
thereto.



1309.  Dissenting shares lose their status as dissenting shares and
the holders thereof cease to be dissenting shareholders and cease to
be entitled to require the corporation to purchase their shares upon
the happening of any of the following:
   (a) The corporation abandons the reorganization. Upon abandonment
of the reorganization, the corporation shall pay on demand to any
dissenting shareholder who has initiated proceedings in good faith
under this chapter all necessary expenses incurred in such
proceedings and reasonable attorneys' fees.
   (b) The shares are transferred prior to their submission for
endorsement in accordance with Section 1302 or are surrendered for
conversion into shares of another class in accordance with the
articles.
   (c) The dissenting shareholder and the corporation do not agree
upon the status of the shares as dissenting shares or upon the
purchase price of the shares, and neither files a complaint or
intervenes in a pending action as provided in Section 1304, within
six months after the date on which notice of the approval by the
outstanding shares or notice pursuant to subdivision (i) of Section
1110 was mailed to the shareholder.
   (d) The dissenting shareholder, with the consent of the
corporation, withdraws the shareholder's demand for purchase of the
dissenting shares.



1310.  If litigation is instituted to test the sufficiency or
regularity of the votes of the shareholders in authorizing a
reorganization, any proceedings under Sections 1304 and 1305 shall be
suspended until final determination of such litigation.




1311.  This chapter, except Section 1312, does not apply to classes
of shares whose terms and provisions specifically set forth the
amount to be paid in respect to such shares in the event of a
reorganization or merger.


1312.  (a) No shareholder of a corporation who has a right under
this chapter to demand payment of cash for the shares held by the
shareholder shall have any right at law or in equity to attack the
validity of the reorganization or short-form merger, or to have the
reorganization or short-form merger set aside or rescinded, except in
an action to test whether the number of shares required to authorize
or approve the reorganization have been legally voted in favor
thereof; but any holder of shares of a class whose terms and
provisions specifically set forth the amount to be paid in respect to
them in the event of a reorganization or short-form merger is
entitled to payment in accordance with those terms and provisions or,
if the principal terms of the reorganization are approved pursuant
to subdivision (b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved
reorganization.
   (b) If one of the parties to a reorganization or short-form merger
is directly or indirectly controlled by, or under common control
with, another party to the reorganization or short-form merger,
subdivision (a) shall not apply to any shareholder of such party who
has not demanded payment of cash for such shareholder's shares
pursuant to this chapter; but if the shareholder institutes any
action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside
or rescinded, the shareholder shall not thereafter have any right to
demand payment of cash for the shareholder's shares pursuant to this
chapter. The court in any action attacking the validity of the
reorganization or short-form merger or to have the reorganization or
short-form merger set aside or rescinded shall not restrain or enjoin
the consummation of the transaction except upon 10 days' prior
notice to the corporation and upon a determination by the court that
clearly no other remedy will adequately protect the complaining
shareholder or the class of shareholders of which such shareholder is
a member.
   (c) If one of the parties to a reorganization or short-form merger
is directly or indirectly controlled by, or under common control
with, another party to the reorganization or short-form merger, in
any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside
or rescinded, (1) a party to a reorganization or short-form merger
which controls another party to the reorganization or short-form
merger shall have the burden of proving that the transaction is just
and reasonable as to the shareholders of the controlled party, and
(2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and
reasonable as to the shareholders of any party so controlled.




1313.  A conversion pursuant to Chapter 11.5 (commencing with
Section 1150) shall be deemed to constitute a reorganization for
purposes of applying the provisions of this chapter, in accordance
with and to the extent provided in Section 1159.



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