APPRAISAL RIGHT Meaning and
Definition
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Appraisal right refers to a legal right granted to shareholders in a corporation or company, allowing them to dissent from a proposed corporate action and demand a fair value for their shares. This right typically arises when there is a significant change in the company's structure, such as a merger, consolidation, sale of assets, or other fundamental transactions.
When shareholders exercise their appraisal right, they have the option to object to the proposed action and instead request the court or an independent appraiser to determine the fair value of their shares. The fair value is the value of the shares as determined under proper appraisal methods and may differ from the market value.
The purpose of appraisal rights is to provide protection to minority shareholders who might otherwise be constrained to accept unfavorable terms or pricing that may accompany corporate actions. It allows dissenting shareholders to receive a just and equitable value for their investment based on an independent evaluation.
Appraisal rights can be subject to certain statutory requirements and restrictions, including specific deadlines for exercising the right and limitations on who can exercise it. Shareholders exercising appraisal rights may be required to follow formal procedures, such as sending a written notice of dissent and participating in litigation or other legal processes to determine the fair value of their shares.
Overall, appraisal rights provide shareholders with an important legal mechanism to ensure a fair valuation of their holdings when significant corporate changes occur.
Etymology of APPRAISAL RIGHT
The word "appraisal" comes from the Old French word "apreisier", which means "to set a price on". It is derived from the Latin word "appretiare", meaning "to value".
The word "right" originates from the Old English word "riht", which denotes a "just claim or entitlement". It is derived from the Proto-Germanic word "rehtaz", meaning "just" or "straight".
When combined, the term "appraisal right" refers to the legal entitlement or claim to have one's property or shares evaluated and appraised for a fair and just value, typically in the context of corporate law or business transactions.
