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Fair Value is defined as the price a buyer might reasonably expect to pay and a seller might reasonably expect to receive for the subject property, assuming:
This definition incorporates the following assumptions:
The definition of fair value has been further clarified by the Revised Model Business Corporation Act (RMBCA or the Model Act). This act has been adopted by the American Bar Association's (ABA) Committee on Corporate Laws and recommended by the ABA's Section of Business Law. It serves as a model for many state legislatures in their creation of statutes concerning rights of objecting shareholders to fundamental corporate changes and certain exchanges of shares.
In a fair value computation, the value of the corporation's shares will be determined:
Item number three above is important because imposing a minority discount on compensation payable to dissenting stockholders for their shares in proceeding under CLS Bus Corp. Section 623 or Section 1118 would necessarily deprive minority stockholders of their proportionate interest in a going concern, and would result in minority shares being valued below that of majority shares, thus violating mandate of equal treatment of all shares of same class in minority stockholder buy-outs.
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