The Delaware Court of Chancery’s latest decision in the Manti Holdings v. Authentix Acquisition, C.A. No. 2017-0887-SG (Del. Ch. 8/11/20), stockholder appraisal litigation provides additional clarity about the ability of corporate constituents to modify by agreement the rights associated with the statutory appraisal remedy, 8 Del. C. Section 262. In a previous decision in the case, Vice Chancellor Sam Glasscock denied a stockholder’s appraisal petition holding that an advance waiver of statutory appraisal rights in a stockholder agreement is permitted under Delaware law as long as the relevant contractual provisions are clear and unambiguous. In its latest decision, the court ruled that a prevailing party fee-shifting provision in the stockholder agreement did not contravene Delaware law and was likewise enforceable.

Background

The petitioning stockholders previously held all of the stock of a predecessor entity Authentix, Inc. In connection with a 2008 merger of the entity into a successor Authentix entity with two new stockholders, petitioners entered into a stockholders agreement with the new stockholders as a condition of the merger. Under the stockholders agreement, petitioners agreed that “in the event that … a company sale is approved by the board” they would “consent to and raise no objection against such transaction … and … refrain from the exercise of appraisal rights with respect to such transaction.” Petitioners also agreed to a “loser pays” provision:

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