Which statement about appraisal rights is false?

• A. The fair value of the shares of stock as of the day prior to the date on which the vote was taken, inclusive of any appreciation or depreciation in anticipation of such action, shall be made the basis for payment upon surrender thereof to the corporation.
• B. The parties are given sixty (60) days from the date the proposed corporate action was voted upon to arrive at the fair value of the dissenting shares.
• C. In the event they cannot agree on the said fair value, it shall be determined by three (3) disinterested persons (one to be named by the stockholder, another by the corporation and the third by the two thus chosen.)
• D. None of the foregoing

Answer: (A)

Appraisal rights ensure dissenting stockholders receive fair value for their shares when a company undergoes a significant action like a merger or consolidation. The value should reflect what the shares are worth at a fixed point immediately before the action takes effect, not speculative changes expected because of the action itself.

The statement that the basis for payment is the fair value as of the day prior to the vote, inclusive of any appreciation or depreciation in anticipation of the action, is not correct because including anticipated effects would distort the true value at the critical pre-action moment. The valuation is meant to fix the price based on the status of the company and its shares just before the action, without counting speculative future movements.

The other parts describe the standard process: there is typically a 60-day window after the action is voted upon to agree on the fair value, and if agreement can’t be reached, the fair value is determined by three disinterested persons—one named by the stockholder, one by the corporation, and the third chosen by the two. This structure is designed to ensure a fair and neutral determination of value.