Corporate law poison pill

What is a poison pill in corporate law?
A poison pill is a defense strategy used by the directors of a public company to prevent activist investors, competitors, or other would-be acquirers from taking control of the company.
Poison pills are executed by buying up large amounts of its stock..
What is the poison pill lawsuit?
The lawsuit in Delaware's Chancery Court targets defensive measures adopted by Ocean Power's directors—including its “shareholder rights plan,” or poison pill,—and bylaws related to board nomination deadlines that the company's leaders are allegedly wielding “to perpetuate themselves in office.”.
Which law firm invented the poison pill?
History.
The poison pill was invented by mergers and acquisitions lawyer Martin Lipton of Wachtell, Lipton, Rosen & Katz in 1982, as a response to tender-based hostile takeovers..
In the context of takeovers, action taken by the target to make itself unattractive to a bidder or potential bidder.
Such action is restricted in the UK by the Takeover Code (Rule 21) and is more common in the US.
The lawsuit in Delaware's Chancery Court targets defensive measures adopted by Ocean Power's directors—including its “shareholder rights plan,” or poison pill,—and bylaws related to board nomination deadlines that the company's leaders are allegedly wielding “to perpetuate themselves in office.”

Poison pills are provisions companies include in their stock issuances that prevent anyone from gaining a controlling stake. They usually have share ownership thresholds set that trigger the issue of more shares to stockholders for a discount or for free.

Poison pills are provisions companies include in their stock issuances that prevent anyone from gaining a controlling stake. They usually have share ownership What Is a Poison Pill?How It WorksPros and ConsTypes

The way that a poison pill works is by setting a trigger or threshold in the terms of stock ownership which, if reached or surpassed by a particular shareholder, will result in the dilution of that shareholder's interest in the company.

How Poison Pills Work

The poison pill is a tactic companies use to deter takeovers by unwanted companies. Often called a shareholder rights plan, it is me…

Special Considerations

Proxyadvisory firms Glass Lewis and International Shareholder Services traditionally opposed poison pills because of their potential to entrench managers …

Advantages and Disadvantages of A Poison Pill

Advantages A company's board has a fiduciary dutyto protect the interests of all shareholders, while an outsider seeking contro…

Types of Poison Pills

Most poison pills are triggered by the accumulation of a company stake above a preset threshold. These are known as flip-in shareholder rightsplans, in contr…

Examples of Poison Pills

The poison pill tactic has been around since the 1980s when it was devised by New York law firm Wachtell, Lipton, Rosen, and Katz amid a wave of hostile tak…

The Bottom Line

Poison pills are provisions companies include in their stock issuances that prevent anyone from gaining a controlling stake. They usually have share owners…

Is the poison pill a mirror of corporate law?

In a recent essay, we explore the relevance of the poison pill as it developed under Delaware law (“D-Pill”) and Japan (“J-Pill”) at this moment of great introspection about the role of corporations in society

We use the poison pill as a mirror, reflecting the evolution of corporate law, markets and norms in the two countries

What is a poison pill?

A poison pill is a defense strategy used by the directors of a public company to prevent activist investors, competitors, or other would-be acquirers from taking control of the company

Poison pills are executed by buying up large amounts of its stock

They effectively block the accumulation of a company's outstanding shares

What is a shareholder rights plan (poison pill)?

The general purpose of a shareholder rights plan or “poison pill” is to deter and mitigate the time pressures of non-negotiated, hostile takeover attempts made at unfair or inadequate prices, or by coercive or unfair tactics

Rights plans have been around for quite some time