Protection

Question 1

What is the appraisal remedy and when is it used

Answer 1

The appraisal remedy is used by minority shareholders when they are unhappy with a fundamental transaction. It allows a minority shareholder to have their shares bought back at fair value

Question 2

What is the procedure to initiate the appraisal remedy

Answer 2

Must give written notice prior to vote, must attend meeting and vote against resolution and must notify company that they will be using the appraisal remedy

Question 3

What is derivative action

Answer 3

Derivative action allows shareholders to bring action against the company for harm they believe to being caused to the company.The company is the plaintiff

Question 4

What are the steps for statutory derivative action

Answer 4

Must serve a demand against the company to take action against itself, an independent person or committee is appointed to investigate, the company can then refuse to comply or begin proceedings against wrongdoers

Question 5

If shareholders want to apply to court to take derivative action what must they prove

Answer 5

Company has suffered harm or risk, directors failed to act in best interest, prove what action is in the best interest of the company and they must be acting in good faith with no hidden interests