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Court of Chancery Upholds Beneficial Owners' Appraisal Rights

Posted In Appraisal

In re Appraisal of Transkaryotic Therapies Inc., C.A. 1554-CC (May 2, 2007).

A company subject to an appraisal petition argued that a beneficial owner who acquired its shares after the record date to vote for the merger should be required to prove that those shares had been voted against the merger by the record holder, Cede & Co.

The Court rejected that argument and noted that the Delaware Supreme Court has long held that a beneficial owner may demand appraisal through a record owner such as Cede & Co. Given that it is not practical for a beneficial owner to trace its shares through depositories such as Cede, this result seems fair and in compliance with prior decisions.