TITLE X: APPRAISAL RIGHT

- Appraisal Right is the right of a stockholder to get out of the

corporation and cease to become a shareholder by returning the
shares of stocks and demanding the corporation to pay for the
fair market value of his shares. It is applicable when the
stockholder dissented and voted against the proposed corporate
action.

Sec. 80. When the Right of Appraisal May Be Exercised

Four instances:
1. In case any amendment to the articles of incorporation has the
effect of changing or restricting the rights of any stockholders
or class of shares, authorizing preferences in any respect superior
to those of outstanding shares of any class, or extending or
shortening the term of corporate existence.
2. In case of sale, lease, exchange, transfer, mortgage, pledge, or
other disposition of all or substantially all of the corporate
property and assets as provided in the RCC.
3. In case of merger or consolidation.
4. In case of investment of corporate funds for any purpose other than
the primary purpose of the corporation.

Sec. 81. How Right is Exercised

Dissenting stockholder:
 Shall make a written demand on the corporation within 30 days from
the date on which the vote was taken. Failure to do this shall be
deemed a waiver of the right.

If within 60 days there was still no agreement on the fair value of

shares, it shall be determined and appraised by disinterested persons
named by:
 Stockholder
 Corporation
 Both

It shall be paid within 30 days after awards is made.

Sec. 82. Effect of Demand and Termination of Right

1. Suspended – from demand of payment of FV of stockholder’s shares
until either abandonment of action involved or purchase of the
said shares by the corporation.
 2. Entitled to receive payment – fair value of the shares agreed
upon by both parties or as determined by the appraisers chosen
by them.
3. Terminated/Permanently Restored – upon payment, rights are
terminated. If before he is paid, proposed corporate action is
abandoned, his rights are permanently restored.
4. Payment uncertain – payment may only be made if corporation has
unrestricted retained earnings to cover it.

Sec. 83. When Right to Payment Ceases.

A dissenting stockholder who demands payment of his shares is no longer
allowed to withdraw from his decision, except:
1. The Corporation consents to the withdrawal;
2. The proposed corporate action is disapproved by the SEC where its
approval is necessary;
3. The proposed corporate action is abandoned or rescinded by the
corporation; and
4. The SEC determines that such stockholder is not entitled to
appraisal right.

Sec. 84. Who Bears Costs of Appraisal

The corporation shall bear the costs of appraisal, except:
- The fair value ascertained by the appraisers is approximately
the same as the price which the corporation may have offered to
pay the stockholder, in which case they shall be borne by the
stockholder.

Sec. 85. Notation on Certificates; Rights of Transferee

Dissenting stockholder shall submit certificates of stock within 10 days
after demanding payment; failure to do so shall terminate the rights at
the option of the corporation.

Effects of transfer of dissenting shares:

1. The rights of the transferor as a dissenting stockholder shall
cease and the transferee shall have all the rights of a regular
stockholder.
2. All dividend distributions which would have accrued on such shares
shall be paid to the transferee.