Dissenters' Rights

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DEFINITION of 'Dissenters' Rights'

State legislation that allows shareholders of a corporation the right to receive a cash payment for the fair value of their share, in the event of a share-for-share merger or acquisition to which the shareholders do not consent. Dissenters' rights allow dissenting shareholders an easy way out of the company if they do not want to be a part of the merger.

INVESTOPEDIA EXPLAINS 'Dissenters' Rights'

Prior to this legislation, mergers and acquisitions required a unanimous vote in favor from the shareholders of the company. This allowed for just one dissenting shareholder to veto the merger or acquisition, even though it may have been in the best interest of the company. State legislation took away this right, but in turn, gave the shareholders the right to receive the cash payment for their shares instead.

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