In response to last week’s blog on Chancellor Chandler’s opinion in In re: Appraisal of Transkaryotic Therapies, Inc., an anonymous member weighed in: “By describing DTC as essentially a black box stuffed with untraceable, fungible share, I think the decision ignores the high likelihood/practical necessity that, in order to properly allocate the right to demand appraisal, DTC, its participant members, and the brokers/persons on whose behalf they act as nominees must have policies and procedures that require the persons they act for to demonstrate ownership as of the record date.
Consider if DTC did receive requests that Cede demand appraisal with respect to more shares than were eligible (on deposit with DTC and not voted in favor of the merger). DTC would check its records and could deny appraisal by participant members in excess of the number of shares such participant had on deposit as of the record date and had not voted in favor of the merger. The participant would then have to engage in the same process and could deny appraisal by persons on whose behalf it acts as nominee in excess of the number of shares such person owned through the participant as of the record date and had not voted in favor of the merger.
All that being said, as Travis correctly points out, such an excess demand for appraisal is not often likely given the number of dead shares which effectively gives aggressive stockholders a free ride to demand appraisal with respect to shares in excess of the shares they owned as of the record date.”
Does anyone know what DTC would do if the number of appraisals demanded by members exceeded the number of shares it had not voted in favor?