N.Y. Banking Law § 6022: Procedure to enforce stockholder's right to receive payment for shares

§ 6022. Procedure to enforce stockholder's right to receive payment

for shares. 1. A stockholder intending to enforce his right under a

section of this chapter to receive payment for his shares if the

proposed corporate action referred to therein is taken shall file with

the corporation, before the meeting of stockholders at which the action

is submitted to a vote, or at such meeting but before the vote, written

objection to the action. The objection shall include a statement that he

intends to demand payment for his shares if the action is taken. Such

objection is not required from any stockholder to whom the corporation

did not give notice of such meeting in accordance with this chapter or

where the proposed action is authorized by written consent of

stockholders without a meeting.

2. Within ten days after the stockholders' authorization date, which

term as used in this section means the date on which the stockholders'

vote authorizing such action was taken, or the date on which such

consent without a meeting was obtained from the requisite stockholders,

the corporation shall give written notice of such authorization or

consent by registered mail to each stockholder who filed written

objection or from whom written objection was not required, excepting any

who voted for or consented in writing to the proposed action.

3. Within twenty days after the giving of notice to him, any

stockholder to whom the corporation was required to give such notice and

who elects to dissent shall file with the corporation a written notice

of such election, stating his name and residence address, the number and

classes of shares as to which he dissents and a demand for payment of

the fair value of his shares.

4. A stockholder may not dissent as to less than all of the shares,

held by him of record, that he owns beneficially. A nominee or fiduciary

may not dissent on behalf of any beneficial owner as to less than all of

the shares of such owner held of record by such nominee or fiduciary.

5. Upon filing a notice of election to dissent, the stockholder shall

cease to have any of the rights of a stockholder except the right to be

paid the fair value of his shares and any other rights under this

section. Withdrawal of a notice of election shall require the written

consent of the corporation. If a notice of election is withdrawn, or the

proposed corporate action is abandoned or rescinded, or a court shall

determine that the stockholder is not entitled to receive payment for

his shares, or the stockholder shall otherwise lose his dissenter's

rights, he shall not have the right to receive payment for his shares

and he shall be reinstated to all his rights as a stockholder as of the

filing of his notice of election, including any intervening preemptive

rights and the right to payment of any intervening dividend or other

distribution or, if any such rights have expired or any such dividend or

distribution other than in cash has been completed, in lieu thereof, at

the election of the corporation, the fair value thereof in cash as

determined by the board as of the time of such expiration or completion,

but without prejudice otherwise to any corporate proceedings that may

have been taken in the interim.

6. At the time of filing the notice of election to dissent or within

one month thereafter the stockholder shall submit the certificates

representing his shares to the corporation, or to its transfer agent,

which shall forthwith note conspicuously thereon that a notice of

election has been filed and shall return the certificates to the

stockholder or other person who submitted them on his behalf. Any

stockholder who fails to submit his certificates for such notation as

herein specified shall, at the option of the corporation exercised by

written notice to him within forty-five days from the date of filing of

such notice of election to dissent, lose his dissenter's rights unless a

court, for good cause shown, shall otherwise direct. Upon transfer of a

certificate bearing such notation, each new certificate issued therefor

shall bear a similar notation together with the name of the original

dissenting holder of the shares and a transferee shall acquire no rights

in the corporation except those which the original dissenting

stockholder had after filing his notice of election.

7. Within seven days after the expiration of the period within which

stockholders may file their notices of election to dissent, or within

seven days after the proposed corporate action is consummated, whichever

is later, the corporation or, in the case of a merger, the receiving

corporation, shall make a written offer by registered mail to each

stockholder who has filed such notice of election to pay for his shares

at a specified price which the corporation considers to be their fair

value. Such offer shall be made at the same price per share to all

dissenting stockholders of the same class, or if divided into series, of

the same series and shall be accompanied by a balance sheet of the

corporation whose shares the dissenting stockholder holds as of the

latest available date, which shall not be earlier than twelve months

before the making of such offer, and a profit and loss statement or

statements for not less than a twelve month period ended on the date of

such balance sheet or, if the corporation was not in existence

throughout such twelve month period, for the portion thereof during

which it was in existence. If within thirty days after the making of

such offer, the corporation making the offer and any stockholder agree

upon the price to be paid for his shares, payment therefor shall be made

within sixty days after the making of such offer upon the surrender of

the certificates representing such shares.

8. The following procedure shall apply if the corporation fails to

make such offer within such period of seven days, or if it makes the

offer and any dissenting stockholder or stockholders fail to agree with

it within the period of thirty days thereafter upon the price to be paid

for their shares:

(a) The corporation or, in the case of a merger, the receiving

corporation shall, within twenty days after the expiration of whichever

is applicable of the two periods last mentioned, institute a special

proceeding in the supreme court in the judicial district in which the

office of the corporation is located to determine the rights of

dissenting stockholders and to fix the fair value of their shares.

(b) If the corporation fails to institute such proceeding within such

period of twenty days, any dissenting stockholder may institute such

proceeding for the same purpose not later than thirty days after the

expiration of such twenty day period. If such proceeding is not

instituted within such thirty day period, all dissenter's rights shall

be lost unless the supreme court, for good cause shown, shall otherwise

direct.

(c) All dissenting stockholders, excepting those who, as provided in

subdivision seven, have agreed with the corporation upon the price to be

paid for their shares, shall be made parties to such proceeding, which

shall have the effect of an action quasi in rem against their shares.

The corporation shall serve a copy of the petition in such proceeding

upon each dissenting stockholder who is a resident of this state in the

manner provided by law for the service of a summons, and upon each

nonresident dissenting stockholder either by registered mail and

publication, or in such other manner as is permitted by law. The

jurisdiction of the court shall be plenary and exclusive.

(d) The court shall determine whether each dissenting stockholder, as

to whom the corporation requests the court to make such determination,

is entitled to receive payment for his shares. If the corporation does

not request any such determination or if the court finds that any

dissenting stockholder is so entitled, it shall proceed to fix the value

of the shares, which, for the purposes of this section, shall be the

fair value as of the close of business on the day prior to the

stockholders' authorization date, excluding any appreciation or

depreciation directly or indirectly induced by such corporate action or

its proposal. The court may, if it so elects, appoint an appraiser to

receive evidence and recommend a decision on the question of fair value.

Such appraiser shall have the power, authority and duties specified in

the order appointing him, or any amendment thereof.

(e) The final order in the proceeding shall be entered against the

corporation in favor of each dissenting stockholder who is a party to

the proceeding and is entitled thereto for the value of his shares so

determined.

(f) The final order shall include an allowance for interest at such

rate as the court finds to be equitable, from the stockholders'

authorization date to the date of payment. If the court finds that the

refusal of any stockholder to accept the corporate offer of payment for

his shares was arbitrary, vexatious or otherwise not in good faith, no

interest shall be allowed to him.

(g) The costs and expenses of such proceeding shall be determined by

the court and shall be assessed against the corporation, or, in the case

of a merger, the receiving corporation, except that all or any part of

such costs and expenses may be apportioned and assessed, as the court

may determine, against any or all of the dissenting stockholders who are

parties to the proceeding if the court finds that their refusal to

accept the corporate offer was arbitrary, vexatious or otherwise not in

good faith. Such expenses shall include reasonable compensation for and

the reasonable expenses of the appraiser, but shall exclude the fees and

expenses of counsel for and experts employed by any party unless the

court, in its discretion, awards such fees and expenses. In exercising

such discretion, the court shall consider any of the following: (A)

that the fair value of the shares as determined materially exceeds the

amount which such corporation offered to pay; (B) that no offer was made

by such corporation; and (C) that such corporation failed to institute

the special proceeding within the period specified therefor.

(h) Within sixty days after final determination of the proceeding, the

corporation or, in the case of a merger, the receiving corporation shall

pay to each dissenting stockholder the amount found to be due him, upon

surrender of the certificates representing his shares.

9. Shares acquired by the corporation upon the payment of the agreed

value therefor or of the amount due under the final order, as provided

in this section, shall be dealt with as provided in section five

thousand fourteen, except that, in the case of a merger, they shall be

disposed of as provided in the plan of merger or consolidation.

10. The enforcement by a stockholder of his right to receive payment

for his shares in the manner provided herein shall exclude the

enforcement by such stockholder of any other right to which he might

otherwise be entitled by virtue of share ownership, except as provided

in subdivision five, and except that this section shall not exclude the

right of such stockholder to bring or maintain an appropriate action to

obtain relief on the ground that such corporate action will be or is

illegal or fraudulent as to him.

11. Except as otherwise expressly provided in this section, any notice

to be given by a corporation to a stockholder under this section shall

be given in the manner provided in section six thousand five.