📚 Stock Market Glossary

Appraisal Rights provide statutory protection for dissenting shareholders who vote against major corporate restructurings (such as mergers, asset sales, or share exchanges), giving them the right to have their shares purchased by the corporation in cash at judicially or statutorily determined fair value.

For minority shareholders, appraisal rights act as a synthetic put option to exit an unfavorable acquisition at a legally determined baseline price. For the acquiring corporation, excessive appraisal claims drain corporate cash reserves and frequently trigger transaction cancellation clauses.

When a stock trades at a meaningful discount to the official appraisal exercise price following an M&A announcement, event-driven arbitrageurs purchase shares to capture guaranteed spread returns.