BILL NUMBER: AB 1680	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Wieckowski

                        FEBRUARY 14, 2012

   An act to amend Sections 1300 and 1301 of the Corporations Code,
relating to dissenting shareholders' rights.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1680, as introduced, Wieckowski. Dissenting shareholders'
rights.
   Existing law, the General Corporation Law, provides for the
formation and governance of general corporations, including the
rights of shareholders of a corporation who dissent from approving a
reorganization or short-form merger. Existing law provides that a
holder of dissenting shares, as defined, who complies with certain
procedures under specified circumstances is entitled to receive from
the corporation the fair market value of the holder's shares, as
defined, determined as of the day before the first announcement of
the terms of the transaction. Existing law provides that holders of
publicly traded shares are only eligible to receive the fair market
value of their shares if demands for payment are filed with respect
to 5% or more of the class of shares.
   This bill would provide that the fair market value shall be the
most recent closing price per share prior to the first announcement
of the terms of the transaction. The bill would eliminate the
provision making holders of publicly traded shares only eligible to
receive the fair market value of their dissenting shares if 5% or
more of the shares are dissenting shares. The bill would make
conforming changes.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1300 of the Corporations Code is amended to
read:
   1300.  (a) If the approval of the outstanding shares (Section 152)
of a corporation is required for a reorganization under subdivisions
(a) and (b) or subdivision (e) or (f) of Section 1201, each
shareholder of the corporation entitled to vote on the transaction
and each shareholder of a subsidiary corporation in a short-form
merger may, by complying with this chapter, require the corporation
in which the shareholder holds shares to purchase for cash at their
fair market value the shares owned by the shareholder which are
dissenting shares as defined in subdivision (b). The fair market
value shall be  determined as of   the most
recent closing price per share prior to  the  day before
the  first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or
depreciation in consequence of the proposed action, but adjusted for
any stock split, reverse stock split, or share dividend which becomes
effective thereafter.
   (b) As used in this chapter, "dissenting shares" means shares
 which   that  come within all of the
following descriptions:
   (1)  Which   That    were not
immediately prior to the reorganization or short-form merger listed
on any national securities exchange certified by the Commissioner of
Corporations under subdivision (o) of Section 25100, and the notice
of meeting of shareholders to act upon the reorganization summarizes
this section and Sections 1301, 1302, 1303 and 1304; provided,
however, that this provision does not apply to any shares with
respect to which there exists any restriction on transfer imposed by
the corporation or by any law or regulation  ; and provided,
further, that this provision does not apply to any class of shares if
demands for payment are filed with respect to 5 percent or more of
the outstanding shares of that class  .
   (2)  Which   That  were outstanding on
the date for the determination of shareholders entitled to vote on
the reorganization and (A) were not voted in favor of the
reorganization or, (B) if described in paragraph (1) 
(without regard to the provisos in that paragraph)  , were
voted against the reorganization, or were held of record on the
effective date of a short-form merger; provided, however, that
subparagraph (A) rather than subparagraph (B) of this paragraph
applies in any case where the approval required by Section 1201 is
sought by written consent rather than at a meeting.
   (3)  Which   That  the dissenting
shareholder has demanded that the corporation purchase at their fair
market value, in accordance with Section 1301.
   (4)  Which   That  the dissenting
shareholder has submitted for endorsement, in accordance with Section
1302.
   (c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of
record.
  SEC. 2.  Section 1301 of the Corporations Code is amended to read:
   1301.  (a) If, in the case of a reorganization, any shareholders
of a corporation have a right under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, to
require the corporation to purchase their shares for cash, that
corporation shall mail to each  such shareholder 
 of those shareholders  a notice of the approval of the
reorganization by its outstanding shares (Section 152) within 10 days
after the date of that approval, accompanied by a copy of Sections
1300, 1302, 1303, and 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of
the dissenting shares, and a brief description of the procedure to be
followed if the shareholder desires to exercise the shareholder's
right under those sections. The statement of price constitutes an
offer by the corporation to purchase at the price stated any
dissenting shares as defined in subdivision (b) of Section 1300,
unless they lose their status as dissenting shares under Section
1309.
   (b) Any shareholder who has a right to require the corporation to
purchase the shareholder's shares for cash under Section 1300,
subject to compliance with paragraphs (3) and (4) of subdivision (b)
thereof, and who desires the corporation to purchase shares shall
make written demand upon the corporation for the purchase of those
shares and payment to the shareholder in cash of their fair market
value. The demand is not effective for any purpose unless it is
received by the corporation or any transfer agent thereof (1) in the
case of shares described  in  subdivision (b) of Section
1300  (without regard to the provisos in that paragraph)
 , not later than the date of the shareholders' meeting to
vote upon the reorganization, or (2) in any other case within 30 days
after the date on which the notice of the approval by the
outstanding shares pursuant to subdivision (a) or the  notice
  filing  pursuant to subdivision (i) of Section
1110 was mailed to the shareholder.
   (c) The demand shall state the number and class of the shares held
of record by the shareholder which the shareholder demands that the
corporation purchase  and shall contain a statement of what
that shareholder claims to be   at  the fair market
value of those shares as  of the day before the announcement
of the proposed reorganization or short-form merger. The statement
of fair market value constitutes an offer by the shareholder to sell
the shares at that price   determined pursuant to
subdivision (a) of Section 1300  .