The appraisal remedy and the determination of fair value by the courts

Abstract

This paper examines the different share valuation methods and principles likely to be used by a court in determining the fair value of dissenting shareholders’ shares in appraisal proceedings in terms of section 164(14) of the Companies Act 2008. It is submitted that the valuation principles and methods used by the courts will affect the operation of the triggering actions contemplated in subsections 164(2)(a) - (b). It is proposed that section 164 court appraisals are likely to be guided by the valuation methods and principles developed in section 252 and section 440K court appraisals under the Companies Act 1973, as well as by the decisions of the courts in the state of Delaware relating to share valuations under the appraisal remedy. It is further proposed that the purpose ascribed to the appraisal remedy will influence the application of these valuation methods and principles.