Corporations Code section 1203

(a)

If a tender offer, including a share exchange tender offer (Section 183.5), or a written proposal for approval of a reorganization subject to Section 1200 or for a sale of assets subject to subdivision (a) of Section 1001 is made to some or all of a corporation’s shareholders by an interested party (herein referred to as an “Interested Party Proposal”), an affirmative opinion in writing as to the fairness of the consideration to the shareholders of that corporation shall be delivered as follows:

(1)

If no shareholder approval or acceptance is required for the consummation of the transaction, the opinion shall be delivered to the corporation’s board of directors not later than the time that consummation of the transaction is authorized and approved by the board of directors.

(2)

If a tender offer is made to the corporation’s shareholders, the opinion shall be delivered to the shareholders at the time that the tender offer is first made in writing to the shareholders. However, if the tender offer is commenced by publication and tender offer materials are subsequently mailed or otherwise distributed to the shareholders, the opinion may be omitted in that publication if the opinion is included in the materials distributed to the shareholders.

(3)

If a shareholders’ meeting is to be held to vote on approval of the transaction, the opinion shall be delivered to the shareholders with the notice of the meeting (Section 601).

(4)

If consents of all shareholders entitled to vote are solicited in writing (Section 603), the opinion shall be delivered at the same time as that solicitation.

(5)

If the consents of all shareholders are not solicited in writing, the opinion shall be delivered to each shareholder whose consent is solicited prior to that shareholder’s consent being given, and to all other shareholders at the time they are given the notice required by subdivision (b) of Section 603.
For purposes of this section, the term “interested party” means a person who is a party to the transaction and (A) directly or indirectly controls the corporation that is the subject of the tender offer or proposal, (B) is, or is directly or indirectly controlled by, an officer or director of the subject corporation, or (C) is an entity in which a material financial interest (subdivision (a) of Section 310) is held by any director or executive officer of the subject corporation. For purposes of the preceding sentence, “any executive officer” means the president, any vice president in charge of a principal business unit, division, or function such as sales, administration, research, development, or finance, and any other officer or other person who performs a policymaking function or has the same duties as those of a president or vice president. The opinion required by this subdivision shall be provided by a person who is not affiliated with the offeror and who, for compensation, engages in the business of advising others as to the value of properties, businesses, or securities. The fact that the opining person previously has provided services to the offeror or a related entity or is simultaneously engaged in providing advice or assistance with respect to the proposed transaction in a manner which makes its compensation contingent on the success of the proposed transaction shall not, for those reasons, be deemed to affiliate the opining person with the offeror. Nothing in this subdivision shall limit the applicability of the standards of review of the transaction in the event of a challenge thereto under Section 310 or subdivision (c) of Section 1312.
This subdivision shall not apply to an Interested Party Proposal if the corporation that is the subject thereof does not have shares held of record by 100 or more persons (determined as provided in Section 605), or if the transaction has been qualified under Section 25113 or 25121 and no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to that qualification.

(b)

If a tender of shares or a vote or written consent is being sought pursuant to an Interested Party Proposal and a later tender offer or written proposal for a reorganization subject to Section 1200 or sale of assets subject to subdivision (a) of Section 1001 that would require a vote or written consent of shareholders is made to the corporation or its shareholders (herein referred to as a “Later Proposal”) by any other person at least 10 days prior to the date for acceptance of the tendered shares or the vote or notice of shareholder approval on the Interested Party Proposal, then each of the following shall apply:

(1)

The shareholders shall be informed of the Later Proposal and any written material provided for this purpose by the later offeror shall be forwarded to the shareholders at that offeror’s expense.

(2)

The shareholders shall be afforded a reasonable opportunity to withdraw any vote, consent, or proxy previously given before the vote or written consent on the Interested Party Proposal becomes effective, or a reasonable time to withdraw any tendered shares before the purchase of the shares pursuant to the Interested Party Proposal. For purposes of this subdivision, a delay of 10 days from the notice or publication of the Later Proposal shall be deemed to provide a reasonable opportunity or time to effect that withdrawal.

Source: Section 1203, https://leginfo.­legislature.­ca.­gov/faces/codes_displaySection.­xhtml?lawCode=CORP§ionNum=1203.­ (accessed Apr. 24, 2025).

Last Updated

Apr. 24, 2025

§ 1203’s source at ca​.gov