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Under Section 80 of the Revised Corporation Code, Appraisal Right refers to the right of any stockholder of a corporation to dissent and demand payment of the fair value of his or her shares in the corporation. Such appraisal right may be exercised in the following instances:
- In case an amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence;
- In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in the Revised Corporation Code;
- In case of merger or consolidation; and
- In case of investment of corporate funds for any purpose other than the primary purpose of the corporation.
The dissenting stockholder who voted against a proposed corporate action may exercise his or her right of appraisal by making a written demand on the corporation for the payment of the fair value of shares held. Said written demand shall be made within thirty (30) days from the date on which the vote was taken. If the dissenting stockholder failed to make demand within 30 days from the date on which the vote was taken, the dissenting stockholder shall be deemed to have waived his or her appraisal right. If the proposed corporate action is implemented, the corporation shall pay the stockholder the fair value of his or her shares upon surrender of the certificate or certificates of stock representing the stockholder’s shares. The basis of the value of the shares of the dissenting stockholder shall be the day before the vote was taken excluding any appreciation or depreciation in anticipation of such corporate action.
If, within sixty (60) days from the approval of the corporate action by the stockholders, the withdrawing stockholder and the corporation cannot agree on the fair value of the shares, it shall be determined and appraised by three (3) disinterested persons. One of whom shall be named by the withdrawing stockholder, another by the corporation. The third member of the appraisers shall be chosen by both the withdrawing stockholder and the corporation. The findings of the majority of the appraisers shall be final, and their award shall be paid by the corporation within thirty (30) days after such award is made. However, please take note that payment by the corporation of the value of the shares to the withdrawing stockholder shall be made only when the corporation has unrestricted retained earnings in its books to cover such payment. Upon payment by the corporation of the agreed or awarded price, the stockholder shall transfer the shares to the corporation.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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