A Study On The Appraisal Rights

The appraisal rights, or the appraisal remedy, refer to the right of shareholders to dissent the resolution concerning fundamental changes of the corporation, and to demand the corporation to buy back their shares with fair value. As one of the important shareholders rights, the appraisal rights have already been provided by relevant laws in most of the countries. Deeply rooted in the equality of shareholders,the appraisal rights originated from the case law of 19th century America, with the purpose to balance the conflicting interests of majority shareholders and minority shareholders, and hereby to realize the equilibrium of both justice and efficiency. In the first place, the right was intended to compensate the minority shareholders for the loss of veto by providing them with a fair cash exit and therefore to extricate the majority shareholders out of the requirement of unanimous consent. Whereas in modern corporate law, the appraisal rights serve a new function of monitoring management's conduct through the remedy and adjustment to the majority rule. And today it has evolved to an effective tool of protection to minority shareholders and of the maintenance of the normal corporate operation. As China is approaching to a mature market economy, the increasingly active transactions of corporations call for the establishment and improvement of the legal protection to minority shareholders. However at present, the appraisal rights are only generally regulated by two administrative regulations. In spite of many legislative recommendations for the appraisal rights, most of the current studies linger on the superficial level lacking in-depth theoretical analysis and comprehensive research on legislation. Based on the evolvement of appraisal rights on corporation law of U.S., the article presents theoretical framework of the appraisal rights and, with a focus on the ambit of application, the procedures and the appraisal of the shares, carries out a comparative study on the appraisal statutes of various countries. According to the extensiveanalysis of the remedy, the author points out the necessity of the introduction and propose the specific stipulations of the appraisal rights in China in an attempt to gear up for the reform and development of Chinese corporate law.