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July 1, 2012

When the World Ends I Want to be in Kentucky Because There Everything Happens Thirty Years Late: Kentucky Finally Joins the Modern Rule Against Marketability Discounts in Dissenter Rights Actions

Written By

Thomas E. Rutledge
Member, Stoll Keenon Ogden PLLC

Published in Kentucky Bar Association Bench & Bar

by Thomas E. Rutledge and Sarah Sloan Reeves

Since 1982 it has been Kentucky law that a discount for minority/marketability may be applied in determining the “fair value” of shares held by a dissenting share­holder. The tide turned against this analysis in 2009 and 2010 when a pair of rulings from the Kentucky Court of Appeals rejected discounts, in effect requiring that the dissenting sharehold­ers receive their full pro-rata value of the corporation as a going concern. Addressing the issue for the first time, the Kentucky Supreme Court affirmed this view in Shawnee Telecom, Inc., v. Kathy Brown, thus bringing Kentucky in line with the majority of jurisdictions, however long overdue.

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Thomas E. Rutledge

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