Corporate charter provisions allowing existing shareholders to purchase stock at some ﬁxed price in the event of a hostile outside takeover attempt are called ___________________.
A) Pac-man defenses.
B) Shark repellent plans.
C) Golden parachute provisions.
D) Greenmail provisions.
E) Share rights plans.

Question

Quizplus · Accepted Answer

The provisions described in the question are commonly known as "share rights plans" or "poison pills." Pac-man defenses involve the target company bidding for the stock of the acquiring company, while shark repellent plans involve anti-takeover measures put in place before any takeover attempt. Golden parachute provisions are severance packages for top executives in the event of a merger or acquisition, and greenmail provisions involve a target company buying back their own stock from a hostile bidder at a premium price.

Corporate Charter Provisions Allowing Existing Shareholders to Purchase Stock at Some