is “Fair Value” Anyway?
The definition of value is critical to the correct application
of the law, especially in the case of shareholder dissent
or minority oppression actions. Fair Value has seldom been
defined clearly in statute, and can vary from jurisdiction
The revised Model Business Corporation Act defines Fair Value
as “The value of the shares just before the effectuation
of the corporate action to which the shareholder objects,
excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
California has not adopted this definition officially. In
most applications Corp Code §2000 in interpreted to require
the appraisers to apply most of the common elements of the
Fair Market Value standard - willing knowledgeable seller,
willing knowledgeable buyer - but to value the shares without
regard to their minority status. In other words to use the
same per share value as a controlling interest would have.