shareholder rights plan

shareholder rights plan
poison pill, Also known as a shareholder rights plan.
In the context of takeovers, action taken by the target to make itself unattractive to a bidder or potential bidder. Such action is restricted under the UK City Code on Takeovers and Mergers (Rule 21) and is more common in the US.
+ poison pill, aka shareholder rights plan
poison pill, Also known as a shareholder rights plan.
A poison pill is a defensive measure used by public companies to frustrate hostile takeover attempts by third parties. A corporation adopts a poison pill by executing a shareholder rights agreement (also known as a rights plan). Under the rights agreement, shareholders receive "rights" (similar to warrants) to purchase the corporation's stock at a substantial discount when the plan is triggered. Usually these rights are distributed (or triggered) when a third party purchases a certain amount of the target company's stock (commonly 15% or 20%). Once the poison pill is triggered, the acquisition can become very expensive for the prospective acquiror and any target company stock previously purchased becomes significantly diluted. The most common types of rights plans are "flip-in" and "flip-over" plans. Flip-in plans give the target company's shareholders the right to purchase additional target company stock (typically on a one-for-one basis) at the discounted price. Flip-over plans give the target company's shareholders the right to purchase stock of the acquiring company at a discounted price.
For more information see Practice Note, Poison Pills: Defending Against Takeovers and Protecting NOLs (

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Игры ⚽ Поможем написать курсовую

Look at other dictionaries:

  • Ontario Teachers' Pension Plan — Board Type Private Industry Pension fund Founded 1989 Headquarters …   Wikipedia

  • Human rights in Canada — Since signing the Universal Declaration of Human Rights in 1948, the Canadian government has attempted to make universal human rights a part of Canadian law. There are currently four key mechanisms in Canada to protect human rights: the Canadian… …   Wikipedia

  • Canada Pension Plan — The Canada Pension Plan (CPP) is a contributory, earnings related social insurance program. It forms one of the two major components of Canada s public retirement income system, the other component being Old Age Security (OAS). Other parts of… …   Wikipedia

  • Poison pill — is a term referring to any strategy, generally in business or politics, to increase the likelihood of negative results over positive ones for a party that attempts any kind of takeover. It derives from its original meaning of a literal poison… …   Wikipedia

  • poison pill — poi·son pill n: a financial tactic or provision used by a company to make an unwanted takeover prohibitively expensive or less desirable Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. poison pill …   Law dictionary

  • Flip-Over Pill — A type of poison pill strategy in which shareholders have the option to purchase shares in the acquiring company at a deeply discounted price. A flip over pill is a shareholder rights plan used as a defense against hostile takeovers, and is one… …   Investment dictionary

  • Gennum Corp. — Infobox Company company name = Gennum Corporation company company type = Public tsx|GND foundation = 1973 location = Burlington, Ontario key people = Robert Weis (Chairman), Franz Fink (President and CEO) industry = Semiconductors products =… …   Wikipedia

  • London & Overseas Freighters — Ltd Industry Ship transport Fate sold Successor Frontline Shipping AB Founded 1948[1] Founder(s) …   Wikipedia

  • null — [nʌl] adjective [only before a noun] 1. STATISTICS a null effect, result etc is one that is zero or nothing 2. LAW another name for null and void: • Their suit also asks the court to declare null the buyer s shareholder rights plan. * * * …   Financial and business terms

  • United Kingdom company law — Beside the River Thames, the City of London is a global financial centre. Within the Square Mile, the London Stock Exchange lies at the heart of the United Kingdom s corporations. United Kingdom company law is the body of rules that concern… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”