Chancery Court Denies Appraisal Rights Where a Stockholders’ Agreement Requires that Stockholders Refrain from Appraisal Petition
By: Annette Becker and Will Smith
In a letter opinion, Manti Holdings, LLC et al. v. Authentix Acquisition Co, Civil Action No. 2017-0887-SG (Del. Ch. October 1, 2018), the Delaware Court of Chancery denied the petitioning stockholders’ cross-motion for statutory appraisal rights under Section 262 of the DGCL, ruling that the stockholders were contractually barred from asserting such rights regarding a merger of respondent Authentix Acquisition Co. (the “Company” and “Respondent”). The Court held that the terms of a stockholders agreement (the “SA”) imposed a duty on Manti Holdings, LLC and the other moving stockholders (“Petitioners”) to forebear from the exercise of their appraisal rights, and granted Respondent’s motion for partial summary judgment on the statutory entitlement to appraisal rights.