Section 155 Valuation of Shares More Limited Than Under DGCL Section 262
Grace Brothers, Ltd. v. Siena Holdings, Inc., 2008 WL 441390 (Del. Ch., Feb. 14, 2008), read letter decision here in which the court denied a motion to compel production of a Private Placement Memorandum in connection with the valuation of shares 5 years later in the context of a claim for violation of DGCL Section 155. Finding that it was too old to be relevant to the value of the shares at the time in question, the court reasoned as follows:
Section 155 of the Delaware General Corporation Law permits-but does not require corporations to issue “fractions of a share.” If a corporation chooses not to issue such fractional shares, it must “pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined. ”FN4 The Supreme Court has indicated that the meaning of “fair value” under section 155(2) is “independent of the definition of ‘fair value’ in Section 262”-the appraisal statute. FN5 The exhaustive approach to valuation that courts employ in the context of appraisal is not required by section 155. FN6 (citations from decision omitted from this blog blurb).
