TITLE X.
– APPRAISAL RIGHT  In case of investment of corporate funds for any purpose other than
1. What is meant by the appraisal right of a shareholder?
Appraisal right means that a stockholder who dissented and voted against the
proposed corporate action, may choose to get out of the corporation by
demanding payment of the market value of his shares.
2. What is its nature?
In certain specified instances, the code grants the stockholder the right to get
out of the corporation even before its dissolution because there has been a
major change in his contract of investment with which he does not agree and
which the law presumes he did not foresee when he bought his shares. Since
the will of 2/3 of the stocks will have to prevail over his objections, the law
considers it only fair to allow him to get back his investment and withdraw
from the corporation.
3. Who may exercise this right?
Any stockholder of a corporation
4. Under what instances may a stockholder exercise his right of
appraisal?
 In case amendment to the articles of incorporation has the effect of:
- changing or restricting the rights of any stockholders or class of
shares
- authorizing preference in a y respect superior to those of outstanding
shares of any class, or
- extending or shortening the term of corporate existence
 In case of sale, lease, exchange, transfer mortgage, pledge or other
disposition of all or substantially all of the corporate property and
assets
 In case of merger or consolidation
the primary purpose of the corporation
5. What is the rule pertaining to appraisal right in a close corporation?
In a close corporation, any stockholder of a close corporation may, for any
reason compel the said corporation to purchase his shares at their fair value,
which shall not be less than their par or issued value, when the corporation
has sufficient assets in its books to cover its debts and liabilities exclusive of
capital stock.
6. What is the procedure for the exercise of the right of appraisal?
1. The dissenting stockholder shall make a written demand on the
corporation within 30 days after the date on which the vote was taken
for payment of the fair value of his shares
2. If the proposed corporate action is implemented or effected, the
corporation shall pay to such stockholder, upon surrender of the
corresponding certificate(s) of stock, representing stockholder’s
shares, the fair value thereof as of the day before the vote was taken,
excluding any appreciation or depreciation of such corporate action.
3. Upon payment of the agreed or awarded price, the stockholder shall
transfer his shares to the corporation
Note: Failure of the stockholder to make the demand within 30 days shall be
deemed waiver of his appraisal right.
7. How is the right exercised?
The dissenting stockholder who votes against a proposed corporate action
may exercise the right of appraisal by making a written demand on the
corporation for the payment of the fair value of shares held within 30 days
from the date on which the vote was taken.
8. What is the effect of failure to demand within the period of 30 days
from demand?

Failure of the stockholder to make the demand within 30 days shall be

deemed waiver of his appraisal right.

9. What is the valuation date?

It is the fair value of the shares of the dissenting stockholder determined as of

the day prior to the date on which the vote was taken excluding any
appreciation or depreciation in value of the shares in anticipation of such
corporate action.

10. If within 60 days from approval of the corporate action by

stockholders, the withdrawing stockholder and the corporation cannot
agree on the fair value of the share, who shall determine the value?

It shall be determined by 3 disinterested persons (appraisers).

11. What is the composition?

 One of whom shall be named by the stockholder

 Another by the corporation
 And the 3rd by the 2 thus chosen