dissenters' rights

Case Study The comptroller of the currency in June 2002 approved a share exchange involving the First National Bank of Midland (Texas). The bank was proposing to undertake an ownership restructuring in which a share exchange would result in the bank becoming a subsidiary of a holding company. Under the proposal, stockholders of the bank would exchange their shares for shares of the holding company. An exception would be made for out-of-state residents, who would receive $2.75 in cash for each bank share. The differing compensation for out-of-state shareholders allowed the holding company to avoid costs associated with registering its stock under the Securities Act of 1933. One of the standards applied by the comptroller of the currency for approval of the proposal was dissenters' rights for all shareholders involved in the exchange. With dissenters' rights, any shareholder of the bank was permitted to opt out of the exchange by requesting the fair market value in cash for the stock he or she surrendered.