A 45-year-old law aimed at easing the “paperwork crisis” surrounding increased stock trading in the 1960s has created a legal gray area and a string of court precedent that Delaware Court of Chancery Vice Chancellor J. Travis Laster said forced him to deny a group of Dell shareholders an appraisal of the company’s going-private merger.
Laster said federal legal precedent on the issue is preferable and would have given the shareholders an opportunity to seek an appraisal of the 2013 deal to take Dell private. But that is not how Delaware courts have interpreted the effects of the Securities Investor Protection Act of 1970, leaving Laster with no choice but to find the investors did not continuously hold their shares through the merger date. By not continuously holding the shares, the investors lost their right to an appraisal under the Delaware General Corporation Law.
