Poison Pill Adoption in Response to Shareholder Activism Board Memorandum
(DE)

Summary

Company counsel, either external or in-house, may use this template to educate the Board of Directors of a company about the key legal issues to address if the Board is considering adopting a shareholder rights plan (or poison pill) in response to activist shareholders. This template contains practical guidance, drafting notes, and optional clauses. Every company and activist investor is different, so counsel should take the circumstances surrounding this particular investment into account in drafting this memo. This template assumes that the Company is governed by Delaware law. This template is appropriate for a company that does not have an existing “shelf” rights plan and does not have an existing Rights Plan Policy that restricts the Board’s ability to adopt a poison pill without shareholder approval. For a full listing of key content for in-house counsel and corporate secretaries when performing corporate functions, see In-House Corporate Secretary Resource Kit. For a full listing of key content covering proxy statements and annual meetings, see Proxy Statement and Annual Meeting Resource Kit. For a broad collection of content related to hostile takeovers and shareholder activism, see Hostile Takeovers & Shareholder Activism Resource Kit. For further information on the legal and strategic matters addressed in this memo, see: Hostile Takeover Defense Strategies, Preparing in Advance for Unsolicited Bids and Shareholder Activist Proposals Checklist, State Anti-Takeover Considerations in M&A Deals, Poison Pills: Fiduciary, Filing, and Disclosure Obligations, Rights Plans: Current Developments in the Application of Derivative Arrangements and Parallel Action by Share Accumulators, and Fiduciary Duties and Director Approvals in M&A Deals (DE).