Stock Redemption Transaction

N.M. Supreme Court holds that in stock redemption transaction, dissenting shareholders may not sue for the broad remedy of breach of fiduciary duty, but are limited to "appraisal right," that is receiving fair value for their stock. The Peters Corp et al v. NM Banquest Investors Corp. et al. (Aug. 4, 2011).    The Court had previously held, in McMinn v. MBF Operating Acquisition Corp., 142 N.M. 160, 164 P.3d 41 (2007), that the appraisal right was not the exclusive remedy in a "freeze-out" merger to eliminate a minority shareholder's interest, but that such shareholder may sue controlling shareholders for breach of fiduciary duty.  The Court declined to extend this remedy to a stock redemption where there was no showing of unlawful or fraudulent conduct by the majority.


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