Delaware’s Limited Liability Company Act provides that a limited liability company agreement or an agreement of merger or consolidation or plan of merger may provide for appraisal rights. 6 Del. Code § 18-210. Does this mean that a Delaware LLC with no such provision need not worry about dissenters' rights? Not necessarily. Article 11 of California's new Revised Uniform Limited Liability Company Act applies to a "foreign limited liability company if the foreign limited liability company was formed on or after January 1, 2014, or filed an application to qualify to do business on or after January 1, 2014, and members holding more than 50 percent of the voting power held by all members of the foreign limited liability company reside in this state." Cal. Corp. Code § 17711.13(a)(2). Corporate lawyers shouldn't be surprised. Section 2115 of the Corporations Code has long imposed Chapter 13 on pseudo-foreign corporations.
Knowing whether dissenters' rights are available may be important from a Blue Sky perspective. Corporations Code Section 25103(h) exempts from the qualification requirements for issuer and reorganization transactions (Corporations Code Sections 25110 and 25120) any exchange incident to a merger, consolidation, or sale of assets, other than a rollup transaction (as defined in Section 25014.6), in consideration of the issuance of equity securities of another entity or any entity conversion transaction that meets specified conditions, including the following:
The exchange incident to a merger, consolidation, or sale of assets or the entity conversion transaction, had the exchange transaction involved the issuance of a security in a transaction subject to the provisions of Section 25110, would have been exempt from qualification by subdivision (f) of Section 25102, without giving effect to paragraph (3) thereof, and either of the following is applicable:
(A) (i) Not less than 75 percent of the outstanding equity securities of each constituent or converting entity entitled to vote on the proposed transaction voted in favor of the transaction, (ii) not more than 10 percent of the outstanding equity securities of each constituent or converting entity entitled to vote on the proposed transaction voted against the transaction, and (iii) each constituent or converting entity whose security holders are entitled to vote on the proposed transaction is subject to a state statute that has provisions for dissenters’ rights for holders of equity securities entitled to vote on the proposed transaction that do not vote in favor of or voted against the transaction.
(B) (i) The transaction is solely for the purposes of changing the issuer’s state of incorporation or organization, or form of organization, (ii) all the securities of the same class or series, unless all the security holders of the class or series consent, are treated equally, and (iii) the holders of nonredeemable voting equity securities receive nonredeemable voting equity securities.