New York Law (NYLE) Practice Exam

How must shareholders preserve their appraisal rights when opposing amendments to the certificate of incorporation?

1. By voting against the amendment

2. By giving written objection before the vote

3. By attending the meeting in person

4. By filing a formal complaint

The correct answer is: By giving written objection before the vote

Shareholders must preserve their appraisal rights by providing a written objection prior to the vote on the amendment to the certificate of incorporation. This requirement ensures that shareholders express their dissent in a formal manner, indicating that they do not agree with the proposed changes and wish to exercise their right to an appraisal for their shares if the amendment is enacted. The rationale for this process is based on the need to give the corporation notice of the dissenting shareholders' intentions. A written objection serves as documentation of the shareholders' dissent that can be referenced in the appraisal process later. Voting against the amendment alone does not suffice, as simply voting does not officially communicate the dissent; it needs to be accompanied by a written objection. Attendance at the meeting also does not guarantee that the shareholders retain their appraisal rights unless they formally object in writing. Filing a formal complaint is not necessary at this stage, as the objection needs to occur before the actual vote takes place. Thus, providing a written objection reflects the critical step for shareholders to maintain their appraisal rights in the context of opposing amendments to the corporate structure.