Corporate Appraisal and Dissenters'-Rights Procedure in Delaware
At a glance
| Governing law, corporation, shareholder, and transaction scope | Delaware General Corporation Law § 262; record stockholder or qualifying direct-demanding beneficial owner of Delaware corporation; Court of Chancery appraisal against survivor/resulting/converted entity (§ 262(a), (d)(3), (e)) |
|---|---|
| Merger, exchange, asset-sale, amendment, conversion, and domestication triggers | Listed statutory merger/consolidation, conversion, transfer, domestication, or continuance routes; excludes § 251(g) holding-company merger and specified inbound § 265/§ 388 transactions. Certificate may add rights for amendment, constituent merger/consolidation, all/substantially-all asset sale, § 266 conversion, or § 390 transfer/domestication/continuance. No general share-exchange trigger (§ 262(b)-(c)) |
| Market-out, public-company, consideration, and governing-record expansion | Listed or >2,000-holder class generally excluded at meeting/consent record date or immediately before § 251(h) agreement; survivor shares excluded when § 251(f) removes vote. Nonqualifying consideration and minority-subsidiary §§ 253/267 exceptions restore rights. Listed-share case dismissed unless >1%, >$1m, or §§ 253/267 merger (§ 262(b), (g)) |
| Record/beneficial ownership, nominees, continuous holding, and share scope | Record holder holds at demand, continuously through effect, complies, and neither votes for nor consents. Direct beneficial owner demand allowed if continuous ownership, record holder identified, documentary proof and truth statement supplied, and notice address provided. Demand may cover any/all shares (§ 262(a), (d)(1)-(3)) |
| Meeting, consent, short-form, and post-effective notice | Meeting notice ≥20 days before, states rights and includes § 262 or free public link; separate pre-vote demand and effective-date notice within 10 days. Consent, § 251(h), § 253, and § 267 routes allow notice before effect or within 10 days after and a 20-day demand (§ 262(d)(1)-(2)) |
| Pre-vote intent, demand form and delivery, and voting consequences | Meeting holder delivers separate writing before vote, reasonably identifying holder and appraisal intent; designated-system electronic transmission allowed. Proxy or negative vote is not demand. Holder neither votes for nor consents; noncompliance defeats right. Alternative routes use postapproval 20-day written demand (§ 262(a), (d)) |
| Post-effective appraisal notice, form, share deposit, and deadline | No corporation appraisal form, estimate, or prepetition certificate deposit. Meeting route sends effectiveness notice within 10 days; alternative-route approval/effective-date notices govern. After petition, Court may require certificates submitted to Register in Chancery for notation and may dismiss noncomplier (§ 262(d), (g)) |
| Corporation payment/offer, supplemental demand, and withdrawal | No corporation-estimate payment/offer or supplemental-value-demand stage. Unjoined, nonfiling eligible person may withdraw within 60 days after effect; later withdrawal requires entity written approval, and dismissal from a pending proceeding requires Court approval. Entity may make pre-judgment cash payment to narrow later interest base (§ 262(e), (h), (k)) |
| Court petitioner, venue, timing, discovery, costs, and interest | Survivor/resulting/converted entity or eligible person petitions Court of Chancery within 120 days after effect; no timely petition ends all rights. Entity files verified demander list within 20 days after service. Court decides entitlement and value under its rules; listed-share dismissal gate, equitable costs, pro-rata expense/attorney/expert allocation. Default interest compounds quarterly at 5 points over Federal Reserve discount rate, subject to good-cause discretion and prepayment (§ 262(e)-(k)) |
| Fair-value, fiduciary, securities, tax, and litigation boundaries | Court uses all relevant factors and excludes value from accomplishment/expectation of transaction. Section 262 does not decide entitlement on disputed facts, valuation method, fiduciary/disclosure claims, securities, tax, evidence, settlement, or strategy (§ 262(h)) |
Requirements one by one
Transactions, market limits, and owners
Section 262 covers stock in transactions under its listed merger, consolidation, conversion, transfer, domestication, and continuance statutes. It excludes a § 251(g) holding-company merger and specified inbound conversion or domestication routes under §§ 265 and 388. A certificate may add appraisal for an amendment, constituent merger or consolidation, all-or-substantially-all asset sale, § 266 conversion, or § 390 transaction. 8 Del. C. § 262(b)-(c).
Listed and more-than-2,000-holder classes are generally excluded, as are surviving-company shares when § 251(f) removed the survivor vote. Nonqualifying consideration and minority subsidiary mergers under §§ 253 and 267 restore rights. A listed-share proceeding is dismissed unless the demand exceeds 1% of eligible shares, the consideration exceeds $1 million, or the transaction uses the stated subsidiary-merger route. 8 Del. C. § 262(b), (g).
A record stockholder must hold at demand, continuously through effectiveness, comply with the demand procedure, and neither vote for nor consent to the transaction. A beneficial owner may now demand directly in the owner's name, but must continuously own, identify the record holder, attach documentary proof and a truth statement, and provide a notice address. 8 Del. C. § 262(a), (d)(3).
Notice and demand
For a meeting, the corporation gives at least 20 days' notice that rights are available and includes § 262 or a free public link. The separate written demand arrives before the vote and reasonably identifies the holder and appraisal intent. A designated-system electronic transmission is allowed; a proxy or negative vote is not the demand. Effectiveness notice follows within 10 days. 8 Del. C. § 262(d)(1).
Consent, offer-followed, and subsidiary routes permit notice before effectiveness or within 10 days afterward. Demand is due within 20 days after notice, subject to the later offer-consummation rule for § 251(h). 8 Del. C. § 262(d)(2).
Section 262 requires no corporation appraisal form, fair-value estimate, or prepetition certificate deposit. After a petition, the Court may direct a certificated holder to submit certificates to the Register in Chancery for notation and may dismiss a noncomplier. 8 Del. C. § 262(g).
Withdrawal, petition, and court
Either the surviving, resulting, or converted entity or an eligible demander may petition the Court of Chancery within 120 days after effectiveness. An unjoined, nonfiling demander may withdraw unilaterally within 60 days. Later withdrawal requires entity written approval, and dismissal from a proceeding also requires Court approval. No timely petition ends all appraisal rights. 8 Del. C. § 262(e), (k).
After service of a demander-filed petition, the entity has 20 days to file the verified list of unresolved demanders. The Court decides entitlement, may require certificate notation, and conducts valuation under its rules. It uses all relevant factors but excludes value arising from accomplishment or expectation of the transaction. 8 Del. C. § 262(f)-(h).
Interest ordinarily compounds quarterly at five points above the changing Federal Reserve discount rate unless the Court finds good cause. A pre-judgment cash payment narrows the later interest base. Costs are equitable, and the Court may allocate participating demanders' attorney and expert expenses pro rata against appraisal awards. 8 Del. C. § 262(h), (j).
What trips people up
A negative vote is not the appraisal demand. The demand is a separate writing, and electronic delivery works only if directed to the notice-designated system. 8 Del. C. § 262(d)(1).
There is no corporation-estimate and supplemental-demand stage. Either the entity or an eligible person may file the appraisal petition within 120 days. 8 Del. C. § 262(e).
The market-out and the Court's listed-share dismissal gate are separate. A transaction may restore statutory rights through consideration or subsidiary- merger rules yet still require testing the 1%, $1 million, or subsidiary-merger court threshold. 8 Del. C. § 262(b), (g).
Common questions
Can a beneficial owner demand directly?
Yes, if the direct demand satisfies § 262(d)(3), including continuous ownership, record-holder identification, documentary proof with a true-copy statement, and a notice address.
Must certificates be deposited before the petition?
No prepetition deposit appears in § 262. After filing, the Court may require certificates submitted to the Register in Chancery for notation. 8 Del. C. § 262(g).
Who may start the appraisal case?
The surviving, resulting, or converted entity or any otherwise eligible person may file within 120 days after effectiveness. 8 Del. C. § 262(e).
Does § 262 decide fiduciary or disclosure claims?
No. It supplies the statutory appraisal entitlement and procedure. Whether a different claim exists or is preserved requires its own governing law and record.
Statutes and sources
- 8 Del. C. § 262 provides the current appraisal entitlement, market and consideration limits, ownership, notice, demand, withdrawal, petition, valuation, interest, certificate, and cost rules. Accessed September 5, 2026.
Source links
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