Bob Thompson has posted to SSRN an interesting article entitled The Case for Iterative Statutory Reform: Appraisal and the Model Act, in which he argues that:
Appraisal statutes providing minority shareholders a judicially-determined value for their shares may be the Model Business Corporation Act’s most distinctive and creative corporate law product. This article, part of a discussion marking the MBCA’s 60th anniversary, traces the somewhat tortured development of appraisal statutes from their traditional focus on providing dissenting shareholders liquidity in a broad variety of transactions to one focused on conflicted transactions initiated by majority shareholders. The historical liquidity function for appraisal, dating from the turn of the 20th century, simply no longer exists. Delaware, the other primary source for corporate statutes in the United States, continues to have an appraisal statute rooted in this now obsolete context; updating has been left mostly to the courts within ill-fitting statutory language. It took the Model Act drafters several iterations over a long period of years to fully transform their statute, but the result is a more coherent approach and an illustration of the relative advantages that can come from an iterative approach to statutory revision.
I see no useful purpose in the modern appraisal proceeding. As Thompson notes, it has become a vehicle for dealing with some--but not all--instances of majority shareholder oppression in connection with some--but not all--freezeout transactions. Better to abolish appraisal and let shareholders pursue a class action for damages.
