USA – NEVADA Trends and Developments Contributed by: Krisanne Cunningham, David Lewandowski, Christopher Walther and Jeffrey Zucker, Fennemore
The Board will want to pay particular attention to any potential conflicts of interest of the directors and offic - ers in connection with a potential M&A transaction. If any such conflicts exist, the Board can try to structure the director and stockholder approval process in a manner that falls within the safe harbour provisions of NRS Section 78.140. Note that while Nevada law does not invalidate a transaction within the safe harbour simply because it involves a common or interested director, the presence of a common or interested director could serve as the basis for a breach of fidu - ciary duty claim. The Board (or the managers of a Nevada LLC) might also want to consider the interplay of the various indemnification, advancement and insurance pro - visions for directors and officers in NRS Sections 78.7502 through 78.752 (or in NRS Sections 86.431 through 86.471 for LLC managers and members) with any comparable provisions in the entity’s governing documents when deciding whether to approve an M&A transaction. Dissenters’ rights and the market-out exception NRS Chapter 92A also governs dissenters’ rights, which allow stockholders in certain transactions (including many forms of mergers) to dissent and demand payment of the fair value of their shares if they carefully follow the defined statutory procedure. Under NRS Section 92A.360, members of a Nevada LLC do not have dissenters’ rights unless the LLC’s governing documents or the merger documents expressly provide for them. In practice, however, the availability of these rights is significantly limited in Nevada because the statute includes a broad “market out” exception, under which dissenters’ rights are generally unavailable for shares that are publicly traded or widely held. As a result, dis - senters’ rights are rarely implicated in public company M&A transactions involving Nevada corporations. This limitation reduces the risk of post-closing valuation disputes and contributes to overall deal certainty. By contrast, in jurisdictions where appraisal rights are more readily available, such claims have been a recurring source of litigation for public companies in the M&A context.
For private companies, given the potential for dissent - ers’ rights proceedings in connection with a merg - er, the Board will need to consider whether minor - ity stockholders might seek to leverage these rights as a means of improving the merger consideration to which they will be entitled. In order to reduce the possibility of procedural dissenters’ rights disputes after a merger’s effective date in cases where either no stockholder approval is required or approval will be by consent and thus there could otherwise be no obliga - tion of a stockholder to give notice of its intent to dis - sent prior to a merger, the Board might also consider sending an advance notice statement under NRS Sec - tion 92A.303 to the stockholders that describes the proposed merger and informs the stockholders that they will be deemed to waive their dissenters’ rights unless they deliver a statement of intent to the cor - poration asserting such rights by a specified deadline occurring prior to the merger’s effective date. Such an advance notice statement would not impact the valu - ation procedures set forth in NRS Chapter 92A with respect to the shares of any dissenting stockholder. It is important to note that Nevada’s dissenters’ rights statutes do not empower dissenting stockholders to stop a merger from proceeding (provided that the corporation has complied with its governing docu - ments and the applicable statutory procedures, and that the merger is not the proximate result of actual fraud against the dissenting stockholders or the cor - poration). Rather, the dissenters’ rights simply serve to determine whether the consideration that the dissent - ing stockholders will receive as a result of the merger may differ from the consideration that is specified in the transaction documents. The Board should never - theless be aware that overly aggressive treatment of minority stockholders could invite additional scrutiny from courts. 2025 legislative amendments: Assembly Bill 239 Nevada’s legislature continues to refine and modern - ise its corporate law as a leading-edge jurisdiction, most recently in Assembly Bill (AB) 239, which was signed and became effective on 30 May 2025. These changes further strengthen Nevada’s pro-manage - ment framework and clarify key points relevant to mergers and acquisitions.
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