The Implementation of Additional Rights of Shareholders (Poison Pills) as Defensive Measures within the Scopes of the Best Interests of the Corporation (Critical Analysis)
Keywords:
Corporate defensive measures; Additional rights of shareholders; “Poison Pills”; Best interests of corporation; Fiduciary Duties; Business Judgment Rule.Abstract
Public Joint Stock Companies are large corporations that trade actively with the securities.
Securities legislation envisages the acquisition of controlling shares, tender-offers and other
transactions based on transparency and awareness of the corporations. But on the other hand the
openness provides the management of the corporation to discuss the future strategy of the
corporation regarding the upcoming offer and adopt the business decisions in the best interests of the
corporation, shareholders and stakeholders.
Corporate law sets legal grounds for fiduciary duties of the Directors and Supervisory Board.
Management is obliged to protect fiduciary duties of care, loyalty and good faith. All actions of
management should comply with the best interests of corporation.
Business decisions of the management are extremely interesting when there is a potential acquisition
of the controlling shares of the corporation, and in order to protect itself, corporation adopts
corporate defensive measures.
One of the most widely used corporate defensive measures is additional rights of shareholders, so
called Poison Pills, that was originated in the USA corporate law and is actively used by the big
USA based corporations.
The aim of the article is to critically analyze the models and phases of development of Poison Pills,
the process of its implementation, the governing bodies which are entitled to execute it and the
compliance of the corporate defensive measures with the best interests of the corporation.
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