Series 79 practice questionhardSqueeze-Out Mergers and Appraisal Rights
In a Delaware short-form merger where a parent owns 90% or more of a subsidiary, which remedy is available to minority shareholders who believe the merger price is unfair?
- AClass action for breach of fiduciary duty
- BPursue statutory appraisal rights to have a court determine the fair value of their shares✓ Correct answer
- CAutomatic right to block the merger
- DDemand a supermajority vote from the subsidiary's board
Explanation
Why B — Pursue statutory appraisal rights to have a court determine the fair value of their shares
Delaware law provides statutory appraisal rights for minority shareholders in a short-form merger, allowing them to petition for a court-determined fair value. The trap is confusing appraisal rights with a blocking right.
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