Arizona Court of Appeals holds that where a minority shareholder dissents from the sale of a corporation, the fair value of those shares are determined at the date of the actual sale of the corporate assets.

A majority owner in a corporation wished to sell and dissolve a corporation over the objection of the sole minority owner.  Before a special shareholder meeting, the majority owner sent a notice to the minority owner that revealed the corporation would be sold to an affiliate of the majority owner.  The minority owner notified the corporation that she did not plan to vote for such a proposal, and that she intended to demand payment for her shares.  At the meeting, the sale and dissolution were approved by the majority owner.  Yet the sale of the corporation did not occur until six months later, when it was valuated and its assets were conveyed to another company through an asset purchase agreement. 

This dispute concerned whether the date of the shareholder meeting or the date of the valuation and subsequent conveyance should be used to value the minority owner’s interest in the shares.  The trial court concluded that the shares should be valued at the shareholder meeting when the corporation authorized the sale.  The Court of Appeals disagreed.  It relied on two sections of the Arizona statute defining dissenting shareholders’ rights.  Under the statute, a shareholder may “dissent from and obtain payment of the fair value of the shareholder’s shares in the event of . . . consummation of a sale or exchange. . . .”  A.R.S. § 10-1302(A)(3).  And the statute also provided that the fair value is “the value of the shares immediately before the effectuation of the corporate action.”  A.R.S. § 10-1301(4).  Reading these provisions together, the Court concluded that the later date should be used to value the minority owner’s shares. 

Chief Judge Swann authored the opinion, in which Judges Winthrop and Portly concurred.