Right to Dissent and Obtain Payment for Shares

ARTICLE 13. Dissenters' Rights

Part 1. Right to Dissent and Obtain Payment for Shares.

§ 55-13-01. Definitions.

In this Article:

(1) "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.

(2) "Dissenter" means a shareholder who is entitled to dissent from corporate action under G.S. 55-13-02 and who exercises that right when and in the manner required by G.S. 55-13-20 through 55-13-28.

(3) "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 would be inequitable.

(4) "Interest" means interest from the effective date of the corporate action until the date of payment, at a rate that is fair and equitable under all the circumstances, giving due consideration to the rate currently paid by the corporation on its principal bank loans, if any, but not less than the rate provided in G.S. 24-1.

(5) "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.

(6) "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.

(7) "Shareholder" means the record shareholder or the beneficial shareholder.

§ 55-13-02. Right to dissent.

(a) In addition to any rights granted under Article 9, a shareholder is entitled to dissent from, and obtain payment of the fair value of his 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 unless approval by the shareholders is not required or such shares are redeemable at a price not greater than the cash to be received in exchange.

(2) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, unless such shares are redeemable at a price not greater than the cash to be received in exchange.

(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.

(4) An amendment of the articles of incorporation that materially and adversely affects rights in respect of a dissenter's shares.

(5) Any corporate action taken pursuant to shareholder vote to the extent provided by the articles, bylaws, or board resolution.

§ 55-13-03. Dissent by nominees and beneficial owners.

(a) A record shareholder may assert dissenters' rights as to fewer than all the shares registered in his name only if he dissents with respect to all the shares beneficially owned by any one person and notifies the corporation in writing of the name and address of each person on whose behalf he asserts dissenters' rights.

(b) A beneficial shareholder may assert dissenters' rights as to shares held on his behalf only if he submits the record shareholder's written consent and does so with respect to all shares of which he is the beneficial shareholder.

§ 55-13-04 to 55-13-19: Reserved for future codification purposes.

Part 2. Procedure for Exercise of Dissenters' Rights.

§ 55-13-20. Notice of dissenters' rights.

(a) If proposed corporate action creating dissenters' rights is submitted to a vote at a shareholders' meeting, the meeting notice must state that shareholders are or may be entitled to assert dissenters' rights and be accompanied by a copy of this Article.

(b) If corporate action creating dissenters' rights is taken without a vote of shareholders, the corporation shall notify all shareholders entitled to assert dissenters' rights within 10 days and send the dissenters' notice described below.

(c) Failure to comply does not invalidate the corporate action, but a shareholder may recover damages in a civil action within three years unless he voted for the action.

§ 55-13-21. Notice of intent to demand payment.

(a) A shareholder who wishes to assert dissenters' rights must give written notice of intent to demand payment before the vote and must not vote his shares in favor of the proposed action.

(b) A shareholder who does not satisfy these requirements is not entitled to payment under this Article.

§ 55-13-22. Dissenters' notice.

(a) If proposed corporate action is authorized, the corporation shall mail a written dissenters' notice to all shareholders who satisfied the notice requirements.

(b) The dissenters' notice must be sent no later than 10 days after the corporate action was taken and must include:

(1) Where the payment demand must be sent and where and when certificates must be deposited.

(2) The extent to which transfer of uncertificated shares will be restricted after demand is received.

(3) A form for demanding payment.

(4) A date by which the corporation must receive the payment demand, not fewer than 30 nor more than 60 days after mailing.

(5) A copy of this Article.

§ 55-13-23. Duty to demand payment.

(a) A shareholder sent a dissenters' notice must demand payment and deposit share certificates in accordance with the notice.

(b) The shareholder retains all other rights of a shareholder until these rights are cancelled or modified by the proposed corporate action.

(c) A shareholder who does not demand payment or deposit certificates by the deadline is not entitled to payment.

§ 55-13-24. Share restrictions.

(a) The corporation may restrict the transfer of uncertificated shares from the date the demand is received until the proposed action is taken or the restrictions are released.

(b) The person for whom rights are asserted retains all other shareholder rights until those rights are cancelled or modified.

§ 55-13-25. Offer of payment.

(a) As soon as the proposed action is taken, or upon receipt of a payment demand, the corporation shall offer to pay each dissenter the fair value of his shares plus interest and shall pay the amount to any dissenter who agrees in writing.

(b) The offer of payment must be accompanied by the corporation's financial statements, an estimate of fair value, an explanation of interest calculation, a statement of the right to demand payment under G.S. 55-13-28, and a copy of this Article.

§ 55-13-26. Failure to take action.

(a) If the corporation does not take the proposed action within 60 days after the deadline for demanding payment and depositing certificates, it shall return the certificates and release transfer restrictions.

(b) If the action is later taken, the corporation must send a new dissenters' notice and repeat the payment procedure.

§ 55-13-28. Procedure if shareholder dissatisfied with corporation's offer or failure to perform.

(a) A dissenter may notify the corporation in writing of his own estimate of fair value and interest due, and demand payment, if the dissenter believes the offer is too low or the corporation fails to pay timely.

(b) A dissenter waives the right to demand payment unless he notifies the corporation in writing within 30 days after the offer or the failure to perform.

§ 55-13-29: Reserved for future codification purposes.

Part 3. Judicial Appraisal of Shares.

§ 55-13-30. Court action.

(a) If a demand for payment remains unsettled, the dissenter may commence a proceeding within 60 days after the payment demand and petition the court to determine the fair value of the shares and accrued interest.

(a 1) If the dissenter does not commence the proceeding within 60 days, the dissenter has an additional 30 days to accept the amount offered or withdraw the demand.

(c) The court may make all dissenters parties to the proceeding. Nonresidents may be served by registered or certified mail or by publication.

(d) The court has plenary and exclusive jurisdiction and may appoint appraisers. The parties are entitled to the same discovery rights as in other civil proceedings.

(e) Each dissenter made a party is entitled to judgment for the amount, if any, by which the fair value plus interest exceeds the amount paid by the corporation.

§ 55-13-31. Court costs and counsel fees.

(a) The court shall determine all costs of the proceeding, including appraisers' compensation and expenses, and assess the cost as it finds equitable.

(b) The court may also assess counsel and expert fees and expenses in amounts it finds equitable under the circumstances.

(c) If the court finds that counsel services provided substantial benefit to other dissenters similarly situated, it may award reasonable fees to be paid out of the amounts awarded the benefited dissenters.