(1) A shareholder is entitled to appraisal rights and to obtain payment of the fair value of that shareholder's shares in the event of any of the following corporate actions:
(a) Consummation of a merger to which the corporation is a party if:
Shareholder approval is required for the merger by section 7-111-103 and the shareholder is entitled to vote on the merger; except that appraisal rights are not available to a shareholder of the corporation with respect to shares of any class or series that remain outstanding after consummation of the merger; or
The corporation is a subsidiary that is merged with its parent corporation under section 7-111-104;
Consummation of a share 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 exchange; except that appraisal rights are not available to any shareholder of the corporation with respect to any class or series of shares of the corporation that is not exchanged;
Consummation of a disposition of assets pursuant to section 7-112-102 (1) if theshareholder is entitled to vote on the disposition;
Consummation of a disposition of assets of an entity controlled by the corporationpursuant to section 7-112-102 (2) if the shareholders of the corporation were entitled to vote on the consent of the corporation to the disposition;
An amendment to the articles of incorporation with respect to a class or series ofshares that reduces the number of shares of a class or series owned by the shareholder to a fraction of a share if the corporation has the obligation or right to repurchase the fractional share so created;
Any other amendment to the articles of incorporation, merger, share exchange, ordisposition of assets to the extent provided by the articles of incorporation, bylaws, or resolution of the board of directors;
Consummation of a conversion of the corporation to nonprofit status pursuant tosection 7-90-201; or
Consummation of a conversion of the corporation to an unincorporated entity pursuant to section 7-90-206 (2) if the shareholder is entitled to vote on the conversion.
(2) Notwithstanding subsection (1) of this section, the availability of appraisal rights under subsections (1)(a), (1)(b), (1)(c), (1)(d), (1)(e), and (1)(h) of this section are limited in accordance with the following provisions:
(a) Appraisal rights are not available for the holders of shares of any class or series of shares that is:
A covered security under section 18 (b)(1)(A) or 18 (b)(1)(B) of the federal "Securities Act of 1933", 15 U.S.C. 77r (b)(1)(A) and 77r (b)(1)(B); or
Not a covered security but is traded in an organized market and has a market valueof at least twenty million dollars, exclusive of the value of the shares held by the corporation's subsidiaries, senior executives, directors, and persons known to the corporation owning more than ten percent of the shares; or
Issued by an open-end management investment company registered with the federalsecurities and exchange commission under the federal "Investment Company Act of 1940", 15 U.S.C. sec. 80a-1 et seq., and that may be redeemed at the option of the holder at net asset value. (b) The applicability of subsection (2)(a) of this section is determined as of:
The record date fixed to determine the shareholders entitled to receive notice of, andto vote at, the meeting of shareholders to act upon the corporate action requiring appraisal rights; or
The day before the effective date of the corporate action if there is no meeting ofshareholders.
(c) Subsection (2)(a) of this section does not apply and appraisal rights are available pursuant to subsection (1) of this section for the holders of any class or series of shares that is required by the terms of the corporate action requiring appraisal rights to accept for the shares anything other than: (I) Cash; or
(II) Shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfy the standards set forth in subsection (2)(a) of this section at the time the corporate action becomes effective.
(d) Subsection (2)(a) of this section does not apply and appraisal rights are available pursuant to subsection (1) of this section for the holders of any class or series of shares where the corporate action is an interested transaction.
(3) Notwithstanding any other provision of this section, the articles of incorporation as originally filed or as amended may limit or eliminate appraisal rights for any class or series of preferred shares; except that an amendment to the articles of incorporation does not apply to any corporate action that becomes effective within one year after the effective date of the amendment if:
That action would otherwise afford appraisal rights; and
The amendment limits or eliminates appraisal rights for shares that:
Are outstanding immediately before the effective date of the amendment; or
The corporation is or may be required to issue or sell after the effective date of theamendment pursuant to any conversion, exchange, or other right existing immediately before the effective date of the amendment.
Source: L. 2019: Entire article R&RE, (SB 19-086), ch. 166, p. 1950, § 56, effective July 1, 2020.
Editor's note: This section is similar to former § 7-113-102 as it existed prior to July 1, 2020.
Cross references: For the federal "Securities Exchange Act of 1934", see 15 U.S.C. 78a et seq.