Georgia Courts Reaffirm Exclusivity of Appraisal Remedy for Dissatisfied Shareholders in Corporate Mergers


In a series of recent decisions, Georgia courts have again — and resoundingly — refused the requests of shareholder plaintiffs to interfere with proposed corporate mergers. Because the Georgia Business Corporation Code allows shareholders to dissent from a merger and obtain payment for the fair value of their shares in an appraisal proceeding,1 these courts have recognized that disgruntled shareholders have an adequate remedy at law after the merger takes place. And because the Georgia General Assembly has “emphasize[d] the exclusive nature of the appraisal remedy under the Code,”2 Georgia courts have repeatedly denied shareholder motions for expedited proceedings and preliminary injunctive relief in the merger context. In August 2011, this trend culminated in four defense victories, including the dismissal of a plaintiff’s claims for breach of fiduciary duty in their entirety.


Georgia’s dissenter’s rights statute, like similar laws throughout the country, provides that a “record shareholder of the corporation is entitled to dissent from, and obtain payment of the fair value of his or her shares in the event of” a corporate merger.3 According to the Georgia Court of Appeals, the “general purpose behind the statutory scheme for appraisal of dissenting shareholders’ stock is to provide an orderly and fair method to evaluate the ownership interests of shareholders who are forced from the corporation.”4 In this respect, Georgia’s corporate law is similar to that of many other states, including Delaware.5

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