May 14, 2020

Considering Poison Pills as Corporate Vaccines Amid COVID-19

Corporate Secretary

The uncertain economic environment associated with the COVID-19 pandemic has led to increased market volatility, lower stock prices, reluctance by shareholders to endorse short-term goals of shareholder activists and higher scrutiny from advisory firms. In her article for Corporate Secretary, Vilena Nicolet writes that this current environment is expected to lead to an increase in hostile takeovers and, as such, boards should look at defense mechanisms ahead of this potential resurgence.

In the article “Considering Poison Pills as Corporate Vaccines Amid COVID-19” Nicolet looks at poison pills (or shareholder rights plans) as versatile defense mechanisms that can be used to protect companies’ net operating losses as well as defend companies against corporate takeovers and shareholder activism.

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