28.12 CONCLUSION
A shareholder may waive their rights under s 164, there is nothing to indicate that they cannot. This is very relevant to a fundamental transaction where the consideration is not cash, such as a share for share exchange. In such a case the shareholder may legitimately agree not to exercise its appraisal rights.
In a fundamental transaction it is permissible for an offeror to make its offer conditional upon all or any of the shareholders not exercising their appraisal rights. It would be expected that such a condition will be frequently imposed where the offer consideration is not cash.
There are flaws in the Appraisal Remedy in that it is very technical, complex and procedural. There are mandatory steps required to perfect the procedure. It is unlikely that minority shareholders will be able to adopt the procedure without their lawyers or accountants.
The appraisal remedy favours the company more. If a minority misses a step i.e. does not send a notice, they can lose the remedy, whereas if the company misses a step like fails to make a written offer nothing happens. The shareholder has 30 days to accept an offer before it lapses and it’s the shareholder who has to ask for court assistance.
A really unfair situation is that once the shareholder sends the written demand to the company, they lose all the rights of their shares until they are paid the fair value which is only paid at the end of the proceedings if there is a judicial review of fair value.
Another disadvantage to the shareholder is cost. The court has a discretion on this. The determination of Fair Value is not an exact science and may be substantially lower than what the shareholder thinks.