Corporate Appraisal and Dissenters'-Rights Procedure in Texas

At a glance

Requirements one by one

Governing law, corporation, shareholder, and transaction scope

Subchapter H of Chapter 10 governs the rights of dissenting owners. Its defined “domestic entity subject to dissenters' rights” includes a domestic for-profit corporation, while the one-owner/all-approving-owner rule removes a fundamental business transaction from the subchapter when those owners hold all otherwise eligible interests immediately before effectiveness. Tex. Bus. Orgs. Code § 10.351(a)-(b) (accessed September 5, 2026).

Merger, exchange, asset-sale, amendment, conversion, and domestication triggers

Section 10.354(a) separately names a vote-required merger, a vote-required sale of all or substantially all assets, an exchange acquiring the owner's interest, a vote-required conversion, the Section 10.006 short-form route, the Section 21.459(c) offer-followed-by-merger route, and an amendment adding or deleting a public-benefit-corporation election. Each route carries its own vote, interest, or transaction condition. Tex. Bus. Orgs. Code § 10.354(a) (accessed September 5, 2026). The section does not name a standalone domestication or continuance trigger.

Market-out, public-company, consideration, and governing-record expansion

For an ordinary merger, conversion, or interest exchange, the market-out requires all three statutory conditions: the class or series is exchange-listed or held by at least 2,000 record owners on the relevant date; same-class holders receive the same consideration apart from fractional cash; and the required consideration is qualifying same-type listed or 2,000-holder interests, fractional cash, or their combination. The market-out does not apply to the Section 10.006 subsidiary route. Tex. Bus. Orgs. Code § 10.354(b)-(c) (accessed September 5, 2026).

The public-benefit-corporation election amendment has its own listed-or-2,000- holder exclusion. Tex. Bus. Orgs. Code § 10.354(d) (accessed September 5, 2026). The corporation branch states no general certificate, bylaw, or board route for adding appraisal rights.

Record/beneficial ownership, nominees, continuous holding, and share scope

The “owner” must perfect the right under Section 10.356 for interests not voted in favor. A transferee of an interest already subject to a payment demand acquires only the original dissenting owner's remaining rights. Tex. Bus. Orgs. Code §§ 10.356(a), 10.360 (accessed September 5, 2026).

The subchapter states no separate continuous-holding or acquisition-date test. It does, however, let the beneficial owner of an interest held in a voting trust or by a nominee file the court petition after the record-side dissenting owner made the demand and the agreement period expired; that filing displaces the earlier dissenter's further rights for the interest. Tex. Bus. Orgs. Code § 10.361(g) (accessed September 5, 2026).

Meeting, consent, short-form, and post-effective notice

Every Subchapter H notice is written and may be mailed, hand-delivered, sent by courier, or delivered electronically. Tex. Bus. Orgs. Code § 10.353(a) (accessed September 5, 2026).

Meeting appraisal notice accompanies the meeting notice. A consenting owner receives notice before delivering consent, while a voting owner who does not consent receives it before the 11th day after effectiveness. The Section 10.006 short-form route uses a notice within 10 days after effectiveness, and the Section 21.459(c) route uses its own tender and effective-date notices. Each rights notice carries Subchapter H or a free public link and identifies the principal executive office for the objection or demand. Tex. Bus. Orgs. Code § 10.355(a)-(f) (accessed September 5, 2026).

Pre-vote intent, demand form and delivery, and voting consequences

For a meeting, the owner sends a written objection addressed to the entity's president and secretary, states an intent to dissent if the action takes effect, gives a notice address, and delivers it to the principal executive office before the meeting. The owner must vote against the action when entitled to vote and may not consent when written consent supplies approval. Tex. Bus. Orgs. Code § 10.356(a)-(b)(2) (accessed September 5, 2026).

After the applicable effectiveness notice, the owner has 20 days to deliver a demand to the responsible organization's principal executive office. The demand is addressed to its president and secretary, demands payment, provides a notice address, and states the number, class, and owner-estimated fair value. The four routes in Section 10.356(b)(3)(E) identify which notice or tender event starts that 20-day period. Tex. Bus. Orgs. Code § 10.356(b)(3) (accessed September 5, 2026).

Post-effective appraisal notice, form, share deposit, and deadline

Within 20 days after making the demand, the owner submits any certificates to the responsible organization for a demand notation. Missing that submission lets the organization terminate the right at its option unless a court directs otherwise for good cause. Tex. Bus. Orgs. Code § 10.356(d) (accessed September 5, 2026). The subsection states no parallel certificate- deposit or notation step for uncertificated interests.

Corporation payment/offer, supplemental demand, and withdrawal

The responsible organization answers the demand within 20 days. Acceptance of the owner's amount leads to payment by the 90th day after the action, subject to delivery of endorsed certificates or signed assignments. Rejection carries the organization's estimate and offer; the owner accepts or the parties agree by the 90th day, and the organization pays an agreed amount by the 120th day on the same certificate-or-assignment condition. Tex. Bus. Orgs. Code § 10.358(a)-(e) (accessed September 5, 2026).

The statute permits withdrawal before payment or a petition. After either event, withdrawal needs the responsible organization's consent. Tex. Bus. Orgs. Code § 10.357 (accessed September 5, 2026).

Court petitioner, venue, timing, discovery, costs, and interest

If the organization rejects the demand and no agreement is reached during the Section 10.358(d) period, either side may petition in the county of the Texas principal office, or the registered-office county when there is no Texas business office. The petition is due by the 60th day after that agreement period expires. The court identifies perfected, payment-entitled owners and appoints one or more qualified appraisers. Tex. Bus. Orgs. Code § 10.361(a)-(e) (accessed September 5, 2026).

The appraiser may examine the organization's books and records and receive relevant evidence. Either side may object to the report; after a hearing, interest runs from the 91st day after effectiveness at the civil prejudgment- interest rate. The court allocates costs fairly and equitably, and the statute makes the appraiser's reasonable fee a court cost. Tex. Bus. Orgs. Code §§ 10.363(c), 10.364(a)-(c), and 10.365 (accessed September 5, 2026).

Fair-value, fiduciary, securities, tax, and litigation boundaries

The statutory reference date is the day before the action. The computation excludes appreciation or depreciation in anticipation of or resulting from the action and uses going-concern value without a control premium, minority discount, or lack-of-marketability discount while accounting for nonvoting class or series rights and limitations. Tex. Bus. Orgs. Code § 10.362(a)-(b) (accessed September 5, 2026). This page reports that statutory boundary without selecting or applying a valuation method.

Once demand is made, the owner retains payment rights and a fraud-relief action but not ordinary voting or owner rights for the demanded interest. Absent fraud, appraisal is the exclusive remedy for the interest's value or money damages concerning the action. Tex. Bus. Orgs. Code §§ 10.366(b)-(c) and 10.368 (accessed September 5, 2026). These provisions do not decide fraud, fiduciary, disclosure, securities, tax, accounting, bankruptcy, evidence, or litigation issues.

What trips people up

A favorable abstention is not enough in Texas's meeting route: the statute requires both the premeeting written objection and an against vote. Missing the later demand period, or the premeeting objection when applicable, binds the owner to the action and ends the appraisal route. Even after a timely demand, late certificate submission lets the responsible organization terminate the right unless a court gives good-cause relief. Tex. Bus. Orgs. Code § 10.356(b)-(d) (accessed September 5, 2026).

Common questions

Does a notice failure invalidate the corporate action?

No. Section 10.353(b) states that failure to provide a required Subchapter H notice does not invalidate an action taken. Tex. Bus. Orgs. Code § 10.353(b) (accessed September 5, 2026).

What happens if nobody files the appraisal petition on time?

The dissent right terminates. The owner is conclusively treated as having approved and ratified the action, the fair-value payment right ends, and the statute restores ownership status or ordinary transaction consideration as the interest's later treatment requires. Tex. Bus. Orgs. Code § 10.367(a)-(b) (accessed September 5, 2026).

Can the corporation add appraisal rights in its governing documents?

Subchapter H expressly authorizes partnership and LLC governing documents to add and modify the statutory rights. Its domestic-for-profit-corporation branch contains no parallel general expansion provision. Tex. Bus. Orgs. Code § 10.351(b)-(c) (accessed September 5, 2026).

Statutes and sources

• Tex. Bus. Orgs. Code § 10.351(a)-(c), § 10.353(a)-(b), and § 10.354(a)-(d) — entity scope, notices, transaction triggers, and market-outs; accessed September 5, 2026.
• Tex. Bus. Orgs. Code § 10.355(a)-(f), § 10.356(a)-(e), § 10.357(a)-(b), and § 10.358(a)-(e) — transaction notices, objection, vote, demand, certificate, withdrawal, response, offer, and payment; accessed September 5, 2026.
• Tex. Bus. Orgs. Code § 10.360, § 10.361(a)-(g), § 10.362(a)-(c), § 10.363(a)-(d), § 10.364(a)-(e), and § 10.365(a)-(b) — transfer, petition, beneficial-owner route, valuation boundary, appraisers, hearing, interest, and costs; accessed September 5, 2026.
• Tex. Bus. Orgs. Code § 10.366(b)-(c), § 10.367(a)-(b), and § 10.368 — post-demand owner status, termination consequences, and exclusivity; accessed September 5, 2026.