Shelf Rights Plan (M&A Glossary)

Summary

A shelf rights plan is a type of shareholder rights plan (also known as a poison pill) for use as a takeover defense by a target in a hostile takeover. The shelf rights plan is prepared and reviewed by a company’s board of directors, but is not officially adopted; rather, it sits “on-the-shelf” and can be adopted quickly in response to a specific hostile threat. An on-the-shelf strategy allows a company to avoid confrontations with activist shareholders and corporate governance activists who have been strong opponents of rights plans.