2023 Laws of Puerto Rico › TITLE FOURTEEN - Private Corporations (§§ 1 — 4084) › Subtitle 5 - General Corporations Act (2009) › Chapter 230 - Merger or Consolidation (§§ 3731 — 3746) › § 3743 - Appraisal rights

(a) Any stockholder of a corporation organized under the Commonwealth who:
(1) Holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares;
(2) continuously holds such shares through the effective date of the merger or consolidation;
(3) has otherwise complied with subsection (d) of this section, and
(4) has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 3657 of this title shall be entitled to an appraisal by the Court of First Instance (Superior Part) of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word “stockholder” means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation. The words “stock” and “share” mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation. The words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in one (1) or more shares, or fractions thereof, of stock of a corporation, which stock 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 to be effected pursuant to §§ 3731, 3732, 3735, 3738 and 3739 of this title:
(1) Provided 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, were either:
(A) Listed on a National Stock Exchange or the National Association of Securities Dealers Automated Quotation System National Market (NASDAQ-NMS), or
(B) held of record by more than two thousand (2,000) holders. 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 § 3731(f) of this title.
(2) Notwithstanding clause (1) of this subsection, 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 §§ 3731, 3732, 3735, 3738 and 3739 of this title 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 at the effective date of the merger or consolidation shall be either listed on a National Stock Exchange or the National Market System or the National Association of Securities Dealers Automated Quotation System (NASDAQ-NMS) or held of record by more than two thousand (2,000) holders;
(C) cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (A) and (B) of this clause, or
(D) any combination of the shares of stock and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (A) through (C) of this clause.
(3) In the event all of the stock of a subsidiary domestic corporation party to a merger effected under § 3732 of this title is not owned by the parent corporation 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 certificate 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 certificate 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 certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, 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 twenty (20) days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting with respect to shares for which appraisal rights are available pursuant to subsections (b) and (c) of this section 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. 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. Such demand shall 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 herein provided. Within ten (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 §§ 3657 and 3733 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within ten (10) days thereafter shall notify each of the holders of any 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 stock of such constituent corporation. Such notice shall include a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within twenty (20) days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand shall 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 each such constituent corporation shall:
(A) Send a second notice before the effective date of the merger or consolidation notifying each of the holders of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation, or
(B) the corporation surviving or resulting from the merger or consolidation shall send such a second notice to all such holders on or within ten (10) days after such effective date.
Provided, however, that if such second notice is sent more than twenty (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 therein. For purposes of determining the stockholders entitled to receive either notice, as the case may be, each constituent corporation may fix, in advance, a record date that shall be not more than ten (10) days prior to the date the notice is given, provided, that 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 next day preceding the day on which the notice is given.
(e) Within one hundred and twenty (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) of this section and is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of First Instance (Superior Part) demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within sixty (60) days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw his/her demand for appraisal and to accept the terms offered upon the merger or consolidation. Within one hundred and twenty (120) days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section, upon written request, 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 and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within ten (10) days after such stockholder’s written request for such a statement is received by the surviving or resulting corporation or within ten (10) days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section, whichever is later.
(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 twenty (20) days after such service file in the office of the Department of State in which the petition was filed a duly verified list containing the names and 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 Department of State, 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 therein stated. Such notice shall also be published at least one (1) week before the day of the hearing, in one (1) or more newspapers of general circulation in the City of San Juan, Puerto Rico, or such other 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) At the hearing on such petition, the Court of First Instance (Superior Part) 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 Department of State for notation thereon of the pendency of the appraisal proceedings. If any stockholder fails to comply with such direction, the court may dismiss the proceedings as to such stockholder.
(h) After the court determines the stockholders entitled to an appraisal, the Court of First Instance (Superior Part) shall determine the fair value of the shares taking into account a fair interest rate if any is 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. In determining a fair rate of interest, the court shall take into account all relevant factors, including the interest rate that the surviving or resulting corporation would have had to pay to borrow money on loan during the course of the proceedings. When the court determines the value of the shares, it shall not take into account any element of value arising from the accomplishment or expectation of the merger or consolidation. 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, allow discovery or any other pre trial proceeding and may proceed to judge the matter of appraisal prior to the final determination of the stockholders entitled to the appraisal of his/her shares. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to the Department of State, 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. In the case of holders of uncertificated stock, payment shall be so made to each such stockholder, 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 ruling may be enforced as other decrees in the Court of First Instance (Superior Part) may be enforced, whether such surviving or resulting corporation be a domestic or foreign corporation.
(j) The costs of the proceeding may be determined by the court and impose them 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) As of the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section 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 which is prior to the effective date of the merger or consolidation). Provided, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, 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 sixty (60) days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of First Instance (Superior Part) shall be dismissed as to any stockholder without the approval of the court, and the court may be condition such approval upon such terms as it deems just.
(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.
History —Dec. 16, 2009, No. 164, § 10.13.