Appraisal rights for shares of stock of constituent corporation in a merger or consolidation; perfection; petition for determination of value of stock of all stockholders, procedure, determination by court.
K.S.A. 17-6712
in effect17-6712. Appraisal rights for shares of stock of constituent corporation in a merger or consolidation; perfection; petition for determination of value of stock of all stockholders, procedure, determination by court.
(a) Any stockholder of a domestic corporation who holds shares of stock on the date of the making of a demand pursuant to subsection (d) with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to K.S.A. 17-6518 , and amendments thereto, shall be entitled to an appraisal by the district court of the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c). As used in this section: "Stockholder" means a holder of record of stock in a corporation; "stock" and "share" mean and include what is ordinarily meant by those words; and "depository receipt" means a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation that is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to K.S.A. 17-6701 , other than a merger effected pursuant to K.S.A. 17-6701 (g), and amendments thereto, and 17-6702 , 17-6705 , 17-6706 , 17-6707 and 17-6708 , and amendments thereto:
(1) Except that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, or in the case of a merger pursuant to K.S.A. 17-7601 (h), and amendments thereto, as of immediately prior to the execution of the agreement of merger, were either:
(A) Listed on a national securities exchange; or
(B) held of record by more than 2,000 holders, except that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in K.S.A. 17-6701 (f), and amendments thereto.
(2) Notwithstanding subsection (b)(1), appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to K.S.A. 17-6701 , 17-6702 , 17-6705 , 17-6706 , 17-6707 and 17-6708 , and amendments thereto, to accept for such stock anything except:
(A) Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
(B) shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock, or depository receipts in respect thereof, or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
(C) cash in lieu of fractional shares or fractional depository receipts described in subparagraphs (A) and (B); or
(D) any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in subparagraphs (A), (B) and (C).
(3) In the event all of the stock of a subsidiary domestic corporation party to a merger effected under K.S.A. 17-6703 , and amendments thereto, is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary domestic corporation.
(c) Any corporation may provide in its articles of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its articles of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the articles of incorporation contain such a provision, the provisions of this section, including those set forth in subsections (d), (e) and (g) shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting, or such members who received notice in accordance with K.S.A. 17-6705 , and amendments thereto, with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if one of the constituent corporations is a nonstock corporation, a copy of K.S.A. 17-6014 , and amendments thereto. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares. A demand may be delivered to the corporation by electronic transmission if directed to an information processing system, if any, expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as provided in this subsection. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) if the merger or consolidation was approved pursuant to K.S.A. 17-6518 , 17-6701 (h) or 17-6703 , and amendments thereto, then, either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if one of the constituent corporations is a nonstock corporation, a copy of K.S.A. 17-6014 , and amendments thereto. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of giving such notice or, in the case of a merger approved pursuant to K.S.A. 17-6701 (h), and amendments thereto, within the later of the consummation of the offer contemplated by K.S.A. 17-6701 (h), and amendments thereto, and 20 days after the date of giving such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. A demand may be delivered to the corporation by electronic transmission if directed to an information processing system, if any, designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either: (A) Each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation; or (B) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date. If such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to K.S.A. 17-6701 (h), and amendments thereto, later than the later of the consummation of the offer contemplated by K.S.A. 17-6701 (h), and amendments thereto, and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated in such affidavit. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given. If the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day when the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the district court demanding a determination of the value of the stock of all such stockholders. Notwithstanding the provisions of this subsection, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d), upon request given in writing, or by electronic transmission directed to an information processing system, if any, expressly designated for that purpose in the notice of appraisal, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation, or in the case of a merger approved pursuant to K.S.A. 17-6701 (h), and amendments thereto, the aggregate number of shares, other than any excluded stock, as defined in K.S.A. 17-6701 (h)(2), and amendments thereto, that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to in K.S.A. 17-6701 (h)(1)(B), and amendments thereto, and, in either case, with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such statement shall be given to the stockholder within 10 days after such stockholder's request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d), whichever is later. Notwithstanding subsection (a), a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person's own name, file a petition or request from the corporation the statement described in this subsection.
(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the clerk of the court where the petition was filed a duly verified list containing the names and postal addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The clerk of the court, if so ordered by the court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses stated in the list. Such notice shall also be given by one or more publications at least one week before the day of the hearing, in a newspaper of general circulation published in the county where the court is located or such publication as the court deems advisable. The forms of the notices by mail and by publication shall be approved by the court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) (1) At the hearing on such petition, the court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the clerk of the court for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the court may dismiss the proceedings as to such stockholder.
(2) This paragraph shall apply only with respect to transactions consummated pursuant to agreements entered into, resolutions of the board of directors adopted and authorizations provided, in each case as applicable, on or after July 1, 2023. If immediately before the merger or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange, the court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless:
(A) The total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal;
(B) the value of the consideration provided in the merger or consolidation for such total number of shares exceeds $1,000,000; or
(C) the merger was approved pursuant to K.S.A. 17-6703 , and amendments thereto.
(h) (1) After the court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the district court, including any rules specifically governing appraisal proceedings. Through such proceeding the court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the court shall take into account all relevant factors. Unless the court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the federal reserve discount rate, including any surcharge, as established from time to time during the period between the effective date of the merger and the date of payment of the judgment.
(2) This paragraph shall apply only with respect to transactions consummated pursuant to agreements entered into, resolutions of the board of directors adopted and authorizations provided, in each case as applicable, on or after July 1, 2023. At any time before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided in this paragraph only upon the sum of: (A) The difference, if any, between the amount so paid and the fair market value of the shares as determined by the court; and (B) interest previously accrued unless paid at that time. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) and who has submitted such stockholder's certificates of stock to the clerk of the court, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.
(i) The court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock immediately, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The court's decree may be enforced as other decrees in the district court may be enforced, whether such surviving or resulting corporation be a domestic corporation or of any state.
(j) The costs of the proceeding may be determined by the court and taxed upon the parties as the court deems equitable in the circumstances. Upon application of a stockholder, the court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock, except dividends or other distributions payable to stockholders of record at a date that is prior to the effective date of the merger or consolidation, except that if no petition for an appraisal shall be filed within the time provided in subsection (e), or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the provisions of this subsection, no appraisal proceeding in the district court shall be dismissed as to any stockholder without the approval of the court, and such approval may be conditioned upon such terms as the court deems just, except that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e).
(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
L. 1972, ch. 52, § 90; L. 1973, ch. 100, § 9; L. 1986, ch. 399, § 14; L. 1996, ch. 135, § 2; L. 2004, ch. 143, § 56; L. 2016, ch. 110, § 77; L. 2017, ch. 71, § 11; L. 2023, ch. 66, § 36; L. 2023, ch. 66, § 37; January 1, 2024.
Source or Prior Law:
17-3707a; 8 Del. C. § 262.
Cross References to Related Sections:
Stock and dividends, see chapter 17, article 64.
Stockholders' meetings, voting of stock and voting rights of members of non-stock corporations, see 17-6505.
Actions against corporations, see chapter 17, article 71.
Service of process on corporations, see 60-304.
Law Review and Bar Journal References:
"The Kansas Corporation Code of 1972" William E. Treadway, 40 J.B.A.K. 301, 346 (1971).
"Close Corporations and the Kansas General Corporation Code of 1972," Edwin W. Hecker, Jr., 22 K.L.R. 489, 501 (1974).
Merger or consolidation under Delaware corporation code § 262, Michael D. Strohbehn, 6 W.L.J. 490 (1977).
"Survey of Kansas Law: Business Associations," William E. Treadway, 27 K.L.R. 171, 181 (1979).
"The Rights of Dissenting Shareholders: Protecting the Owners Manning Forgot," Allan W. Vestal, 37 K.L.R. 349, 352, 377, 383 (1989).
"Pending Changes to the Kansas General Corporation Code," William E. Quick, 72 J.K.B.A. No. 1, 21 (2003).
"The New Corporate Landscape: 2004 Kansas General Corporation Code," William Quick, 73 J.K.B.A. No. 7, 30 (2004).
"What Constitutes Excusable Neglect? A Guide for the Kansas Federal & State Practitioner," Steven W. Allton, John W. Broomes, 77 J.K.B.A. No. 5, 6 (2008).
CASE ANNOTATIONS
1. Statutes discussed at length; various applications construed. Moore v. New Ammest, Inc., 6 Kan. App. 2d 461, 462, 630 P.2d 167 (1981).
2. Dissenting stockholders electing appraisal not entitled to any value arising from merger; rescission only by statutory procedure. Wichers v. Solomon Valley Feed Lot, Inc., 10 Kan. App. 2d 486, 487, 488, 704 P.2d 383 (1985).
3. Review of price dissenting shareholders received for stock in cash-out merger; appraisal request and jurisdiction examined. In re Hesston Corp., 254 Kan. 941, 943, 948, 870 P.2d 17 (1994).
4. Section to be liberally construed for protection of dissenting shareholders. Vernon v. Commerce Financial Corp., 32 Kan. App. 2d 506, 85 P.3d 211 (2004).
Source: Kansas Office of Revisor of Statutes (ksrevisor.gov)URL: https://www.ksrevisor.gov/statutes/chapters/ch17/017_067_0012.htmlFetched: 10/20/2026