Thursday, October 27, 2011
Ky S.Ct. Rejects Minority Discounts in Dissenter Rights
Rights Actions –
Telecom v. Kathy Brown Shawnee
This morning, in Shawnee Telecom v. Kathy Brown, 2009-SC-00574-DG (Oct. 27, 2011), the Kentucky Supreme Court expressly overturned Ford v. Courier-Journal Job Printing Co. and minority discounts in the valuation of the shares of a dissenting shareholder. Rather, the corporation is to be valued as a whole on a going concern basis, and the shareholder is entitled to their proportionate interest in that total value.
A detailed analysis of this decision will follow in a day or two, but until then it should be noted that this is an exceptionally well researched and written opinion. The Court traced the development of dissenter rights and as well traced the history of the circumstances in which they are typically employed, namely squeeze out and similar transactions. However, even as the Court cited many law review articles on these topics, they failed to reference that of Professor Rutheford B. “Biff” Campbell, Jr., Corporate Fiduciary Duties in Kentucky, 93 Ky. L J. 551, 602-11 ((2004-05). He had argued against both the Delaware Block Method of valuation and minority discounts, both positions adopted today by the Supreme Court.