Corporate Appraisal and Dissenters'-Rights Procedure in Arizona

At a glance

Requirements one by one

Governing law and transaction scope

Chapter 13 defines both record and beneficial shareholders. For the relevant transaction, the corporation includes the issuer or its merger/exchange survivor or acquirer. Section 10-1301.

Section 10-1302(A) separates approval-required, vote-entitled mergers from subsidiary mergers, acquired-company interest exchanges, and qualifying outside-course sales or exchanges. The charter-amendment grounds concern preferential, redemption, preemptive, voting/cumulative-voting, and specified fractional-share rights. Ordinary voting dilution is expressly excluded from that voting-right ground.

Domestication and conversion require the specified less-favorable terms or voting-percentage result. The section also has a division provision measuring the interests received in each resulting entity; this survey does not expand into division approval procedure. Benefit-status elections are separately listed. Governing records may add rights for shareholder-voted actions. Section 10-1302(A)(5)-(9).

Exclusions

The registered-investment-company exclusion in § 10-1302(C) is separate from the public-market exclusion in subsection D. The latter can be overridden by the articles and tests exchange registration, specified Nasdaq listing, or 2,000 record holders as of the voting record date. It does not state a cash-consideration or interested-transaction exception.

For a sale or exchange, the statute excludes a court-ordered sale and a cash sale under a plan distributing all or substantially all net proceeds within one year. Section 10-1302(A)(3). These conditions do not determine whether a particular transaction is eligible.

Owners and nominees

A record holder dissenting for part of its registered position must include all shares beneficially owned by each represented person and identify that person's name and address in writing. A beneficial owner asserting directly must submit the record holder's written consent by assertion and include all shares owned or subject to its voting direction. Section 10-1303.

The announcement-date certification affects whether the corporation may withhold the initial payment; it is not a stated general continuous-holding condition. Sections 10-1322(B)(3) and 10-1327.

Notice and advance intent

The meeting notice states rights are or may be available and includes the article. For action without a shareholder vote, the corporation gives all entitled holders written notice that the action was taken and sends the statutory dissenters' notice. Section 10-1320.

A meeting dissenter gives written intent before the vote and does not vote the shares in favor. Missing those conditions bars payment. The later demand is a separate step. Section 10-1321.

Demand form and deposit

Section 10-1322 says notice is due no later than 10 days after the corporate action is taken. The form identifies the first announcement to news media or shareholders and asks whether beneficial ownership preceded it. The notice sets destinations, certificate timing, uncertificated-share restrictions, and a demand-receipt date 30 to 60 days after delivery, and includes the article.

The holder must demand payment, certify ownership timing, and deposit any required certificates under the notice. Missing the demand or required deposit deadline bars payment. Ordinary share rights continue until cancelled or modified by the corporate action. Sections 10-1323 and 10-1324.

Payment and objections

Ordinary payment is estimated fair value plus accrued interest as soon as the action is taken, or on receipt of a demand when the action is taken without a shareholder vote. The payment includes the specified financials, value estimate, interest explanation, supplemental-demand statement, and article. The fiscal-year balance sheet cannot be more than 16 months old. Section 10-1325.

The corporation may withhold the advance from an owner who acquired after the announcement date. After action, it estimates value plus interest and pays a holder accepting in full satisfaction; the offer supplies the value, interest, and supplemental-right information. Section 10-1327.

A dissenter may state its own estimate and interest and demand the difference, or reject the offer, on the stated undervaluation, nonpayment, or unreleased- certificate/restriction grounds. The written supplemental demand must come within 30 days after the corporation made or offered payment. Section 10-1328.

Failure to act and withdrawal

If the corporation does not act within 60 days after the date set for demand and deposit, it must return certificates and release restrictions. Proceeding later requires a new notice and a repeated demand process. Section 10-1326. The cited Chapter 13 provisions do not supply a separate voluntary-withdrawal deadline or a general unilateral withdrawal right.

Court, master, and costs

The corporation must commence within 60 days after an unsettled supplemental demand or pay the demanded amount. Venue follows the principal office or Arizona known place of business, with the stated foreign-corporation fallback. All unsettled dissenters must be parties and receive the petition. Section 10-1330(A)-(C).

There is no jury right. The court may appoint a master, whose report is subject to exceptions on law and facts; dissenters have ordinary civil discovery rights. The judgment covers the statutory deficiency or withheld value plus interest. Section 10-1330(D)-(E).

Costs generally fall on the corporation, but § 10-1331(A) requires assessment against dissenters to the extent value does not materially exceed the offer or the holders acted arbitrarily, vexatiously, or in bad faith. Subsection B separately permits attorney/expert fee awards for corporate noncompliance, insufficient value improvement, or either side's misconduct.

Value and other remedies

Fair value is measured immediately before effectuation, excluding anticipated transaction effects unless exclusion would be inequitable. Interest runs from effectiveness through payment at the corporation's average principal- bank-loan rate, or a fair and equitable rate if none. Section 10-1301(4)-(5).

Section 10-1302(B) preserves the stated unlawful-or-fraudulent challenge exception. This page does not determine eligibility, value, interest, costs, or the availability of a different claim for a real transaction.

What trips people up

The statutory cost rule can apply even without a finding of holder misconduct: it separately compares the value found with the corporation's offer. The fee rule is discretionary; the cost rule uses mandatory language. Section 10-1331.

Common questions

Can uncertificated shares be restricted while the action is pending? Yes, from receipt of the demand until the action or release under the failure-to- act rule. Section 10-1324(A).

Can common-benefit lawyer fees be paid from other dissenters' awards? Section 10-1331(C) permits that when the services substantially benefited similarly situated dissenters and the fees should not fall on the corporation.

Statutes and sources

• A.R.S. § 10-1301 — official text (accessed September 5, 2026).

In this article, unless the context otherwise requires: 1. "Beneficial shareholder" means the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder. 2. "Corporation" means the issuer of the shares held by a dissenter before the corporate action or the surviving or acquiring corporation by merger or share exchange of that issuer. 3. "Dissenter" means a shareholder who is entitled to dissent from corporate action under section 10-1302 and who exercises that right when and in the manner required by article 2 of this chapter. 4. "Fair value" with respect to a dissenter's shares means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion is inequitable. 5. "Interest" means interest from the effective date of the corporate action until the date of payment at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under the circumstances. 6. "Record shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. 7. "Shareholder" means the record shareholder or the beneficial shareholder.

• A.R.S. § 10-1302 — official text (accessed September 5, 2026).

A. A shareholder of a domestic corporation is entitled to dissent from and obtain payment of the fair value of the shareholder's shares in the event of any of the following corporate actions: 1. Consummation of a plan of merger to which the corporation is a party if either: (a) Shareholder approval is required for the merger by section 10-1103 or the articles of incorporation and if the shareholder is entitled to vote on the merger. (b) The corporation is a subsidiary that is merged with its parent under section 10-1104. 2. Consummation of a plan of interest exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the plan. 3. Consummation of a sale or exchange of all or substantially all of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, but not including a sale pursuant to a court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one year after the date of sale. 4. An amendment of the articles of incorporation that materially and adversely affects rights in respect of a dissenter's shares because it either: (a) Alters or abolishes a preferential right of the shares. (b) Creates, alters or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of the shares. (c) Alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities. (d) Excludes or limits the right of the shares to vote on any matter or to cumulate votes other than a limitation by dilution through issuance of shares or other securities with similar voting rights. (e) Reduces the number of shares owned by the shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under section 10-604. 5. Any corporate action taken pursuant to a shareholder vote to the extent the articles of incorporation, the bylaws or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares. 6. An election of the shareholders pursuant to section 10-2404 to have benefit corporation status or an election of the shareholders pursuant to section 10-2405 to terminate status as a benefit corporation. 7. Consummation of a plan of domestication if the shareholder does not receive interests in the foreign domesticated entity that have terms as favorable to the shareholder in all material respects and that represent at least the same percentage interest of the total voting rights of the outstanding interests of the domesticated entity as the shares held by the shareholder before the domestication. 8. Consummation of a plan of conversion if the shareholder does not receive interests in the converted entity that have terms as favorable to the shareholder in all material respects and that represent at least the same percentage interest of the total voting rights of the outstanding interests of the converted entity as the shares held by the shareholder before the conversion. 9. Consummation of a plan of division if the shareholder does not receive interests in each resulting entity that have terms as favorable to the shareholder in all material respects and that represent at least the same percentage interest of the total voting rights of the outstanding interests of each resulting entity as the shares held by the shareholder before the division. B. A shareholder entitled to dissent and obtain payment for his shares under this chapter may not challenge the corporate action creating the shareholder's entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation. C. This section does not apply to the holders of shares of any class or series if the shares of the class or series are redeemable securities issued by a registered investment company as defined pursuant to the investment company act of 1940 (15 United States Code section 80a-1 through 80a-64). D. Unless the articles of incorporation of the corporation provide otherwise, this section does not apply to the holders of shares of a class or series if the shares of the class or series were registered on a national securities exchange, were listed on the national market systems of the national association of securities dealers automated quotation system or were held of record by at least two thousand shareholders on the date fixed to determine the shareholders entitled to vote on the proposed corporate action.

• A.R.S. § 10-1303 — official text (accessed September 5, 2026).

A. A record shareholder may assert dissenters' rights as to fewer than all of the shares registered in the record shareholder's name only if the record shareholder dissents with respect to all shares beneficially owned by any one person and notifies the corporation in writing of the name and address of each person on whose behalf the record shareholder asserts dissenters' rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which the record shareholder dissents and the record shareholder's other shares were registered in the names of different shareholders. B. A beneficial shareholder may assert dissenters' rights as to shares held on the beneficial shareholder's behalf only if both: 1. The beneficial shareholder submits to the corporation the record shareholder's written consent to the dissent not later than the time the beneficial shareholder asserts dissenters' rights. 2. The beneficial shareholder does so with respect to all shares of which the beneficial shareholder is the beneficial shareholder or over which the beneficial shareholder has power to direct the vote.

• A.R.S. § 10-1320 — official text (accessed September 5, 2026).

A. If proposed corporate action creating dissenters' rights under section 10-1302 is submitted to a vote at a shareholders' meeting, the meeting notice shall state that shareholders are or may be entitled to assert dissenters' rights under this article and shall be accompanied by a copy of this article. B. If corporate action creating dissenters' rights under section 10-1302 is taken without a vote of shareholders, the corporation shall notify in writing all shareholders entitled to assert dissenters' rights that the action was taken and shall send them the dissenters' notice described in section 10-1322.

• A.R.S. § 10-1321 — official text (accessed September 5, 2026).

A. If proposed corporate action creating dissenters' rights under section 10-1302 is submitted to a vote at a shareholders' meeting, a shareholder who wishes to assert dissenters' rights shall both: 1. Deliver to the corporation before the vote is taken written notice of the shareholder's intent to demand payment for the shareholder's shares if the proposed action is effectuated. 2. Not vote the shares in favor of the proposed action. B. A shareholder who does not satisfy the requirements of subsection A of this section is not entitled to payment for the shares under this article.

• A.R.S. § 10-1322 — official text (accessed September 5, 2026).

A. If proposed corporate action creating dissenters' rights under section 10-1302 is authorized at a shareholders' meeting, the corporation shall deliver a written dissenters' notice to all shareholders who satisfied the requirements of section 10-1321. B. The dissenters' notice shall be sent no later than ten days after the corporate action is taken and shall: 1. State where the payment demand must be sent and where and when certificates for certificated shares shall be deposited. 2. Inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received. 3. Supply a form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action and that requires that the person asserting dissenters' rights certify whether or not the person acquired beneficial ownership of the shares before that date. 4. Set a date by which the corporation must receive the payment demand, which date shall be at least thirty but not more than sixty days after the date the notice provided by subsection A of this section is delivered. 5. Be accompanied by a copy of this article.

• A.R.S. § 10-1323 — official text (accessed September 5, 2026).

A. A shareholder sent a dissenters' notice described in section 10-1322 shall demand payment, certify whether the shareholder acquired beneficial ownership of the shares before the date required to be set forth in the dissenters' notice pursuant to section 10-1322, subsection B, paragraph 3 and deposit the shareholder's certificates in accordance with the terms of the notice. B. A shareholder who demands payment and deposits the shareholder's certificates under subsection A of this section retains all other rights of a shareholder until these rights are canceled or modified by the taking of the proposed corporate action. C. A shareholder who does not demand payment or does not deposit the shareholder's certificates if required, each by the date set in the dissenters' notice, is not entitled to payment for the shareholder's shares under this article.

• A.R.S. § 10-1324 — official text (accessed September 5, 2026).

A. The corporation may restrict the transfer of uncertificated shares from the date the demand for their payment is received until the proposed corporate action is taken or the restrictions are released under section 10-1326. B. The person for whom dissenters' rights are asserted as to uncertificated shares retains all other rights of a shareholder until these rights are canceled or modified by the taking of the proposed corporate action.

• A.R.S. § 10-1325 — official text (accessed September 5, 2026).

A. Except as provided in section 10-1327, as soon as the proposed corporate action is taken, or if such action is taken without a shareholder vote, on receipt of a payment demand, the corporation shall pay each dissenter who complied with section 10-1323 the amount the corporation estimates to be the fair value of the dissenter's shares plus accrued interest. B. The payment shall be accompanied by all of the following: 1. The corporation's balance sheet as of the end of a fiscal year ending not more than sixteen months before the date of payment, an income statement for that year, a statement of changes in shareholders' equity for that year and the latest available interim financial statements, if any. 2. A statement of the corporation's estimate of the fair value of the shares. 3. An explanation of how the interest was calculated. 4. A statement of the dissenter's right to demand payment under section 10-1328. 5. A copy of this article.

• A.R.S. § 10-1326 — official text (accessed September 5, 2026).

A. If the corporation does not take the proposed action within sixty days after the date set for demanding payment and depositing share certificates, the corporation shall return the deposited certificates and release the transfer restrictions imposed on uncertificated shares. B. If after returning deposited certificates and releasing transfer restrictions, the corporation takes the proposed action, it shall send a new dissenters' notice under section 10-1322 and shall repeat the payment demand procedure.

• A.R.S. § 10-1327 — official text (accessed September 5, 2026).

A. A corporation may elect to withhold payment required by section 10-1325 from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenters' notice as the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action. B. To the extent the corporation elects to withhold payment under subsection A of this section, after taking the proposed corporate action, it shall estimate the fair value of the shares plus accrued interest and shall pay this amount to each dissenter who agrees to accept it in full satisfaction of his demand. The corporation shall send with its offer a statement of its estimate of the fair value of the shares, an explanation of how the interest was calculated and a statement of the dissenters' right to demand payment under section 10-1328.

• A.R.S. § 10-1328 — official text (accessed September 5, 2026).

A. A dissenter may notify the corporation in writing of the dissenter's own estimate of the fair value of the dissenter's shares and amount of interest due and either demand payment of the dissenter's estimate, less any payment under section 10-1325, or reject the corporation's offer under section 10-1327 and demand payment of the fair value of the dissenter's shares and interest due, if either: 1. The dissenter believes that the amount paid under section 10-1325 or offered under section 10-1327 is less than the fair value of the dissenter's shares or that the interest due is incorrectly calculated. 2. The corporation fails to make payment under section 10-1325 within sixty days after the date set for demanding payment. 3. The corporation, having failed to take the proposed action, does not return the deposited certificates or does not release the transfer restrictions imposed on uncertificated shares within sixty days after the date set for demanding payment. B. A dissenter waives the right to demand payment under this section unless the dissenter notifies the corporation of the dissenter's demand in writing under subsection A of this section within thirty days after the corporation made or offered payment for the dissenter's shares.

• A.R.S. § 10-1330 — official text (accessed September 5, 2026).

A. If a demand for payment under section 10-1328 remains unsettled, the corporation shall commence a proceeding within sixty days after receiving the payment demand and shall petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the sixty day period, it shall pay each dissenter whose demand remains unsettled the amount demanded. B. The corporation shall commence the proceeding in the court in the county where a corporation's principal office or, if none in this state, its known place of business is located. If the corporation is a foreign corporation without a known place of business in this state, it shall commence the proceeding in the county in this state where the known place of business of the domestic corporation was located. C. The corporation shall make all dissenters, whether or not residents of this state, whose demands remain unsettled parties to the proceeding as in an action against their shares, and all parties shall be served with a copy of the petition. Nonresidents may be served by certified mail or by publication as provided by law or by the Arizona rules of civil procedure. D. The jurisdiction of the court in which the proceeding is commenced under subsection B of this section is plenary and exclusive. There is no right to trial by jury in any proceeding brought under this section. The court may appoint a master to have the powers and authorities as are conferred on masters by law, by the Arizona rules of civil procedure or by the order of appointment. The master's report is subject to exceptions to be heard before the court, both on the law and the facts. The dissenters are entitled to the same discovery rights as parties in other civil proceedings. E. Each dissenter made a party to the proceeding is entitled to judgment either: 1. For the amount, if any, by which the court finds the fair value of his shares plus interest exceeds the amount paid by the corporation. 2. For the fair value plus accrued interest of the dissenter's after-acquired shares for which the corporation elected to withhold payment under section 10-1327.

• A.R.S. § 10-1331 — official text (accessed September 5, 2026).

A. The court in an appraisal proceeding commenced under section 10-1330 shall determine all costs of the proceeding, including the reasonable compensation and expenses of any master appointed by the court. The court shall assess the costs against the corporation, except that the court shall assess costs against all or some of the dissenters to the extent the court finds that the fair value does not materially exceed the amount offered by the corporation pursuant to sections 10-1325 and 10-1327 or that the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment under section 10-1328. B. The court may also assess the fees and expenses of attorneys and experts for the respective parties in amounts the court finds equitable either: 1. Against the corporation and in favor of any or all dissenters if the court finds that the corporation did not substantially comply with the requirements of article 2 of this chapter. 2. Against the dissenter and in favor of the corporation if the court finds that the fair value does not materially exceed the amount offered by the corporation pursuant to sections 10-1325 and 10-1327. 3. Against either the corporation or a dissenter in favor of any other party if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by this chapter. C. If the court finds that the services of an attorney for any dissenter were of substantial benefit to other dissenters similarly situated and that the fees for those services should not be assessed against the corporation, the court may award to these attorneys reasonable fees to be paid out of the amounts awarded the dissenters who were benefitted.