What is a shareholder rights plan?

A shareholder rights plan, also known as a “poison pill”, is a corporate law device that protects a company from corporate takeovers. This plan gives shareholders the right to purchase more shares of the company at a discounted rate if someone tries to purchase a large number of shares. This plan makes it more difficult for outside investors to gain control, as it increases the cost of the takeover. The plan also gives existing shareholders the ability to maintain a certain percentage of ownership in the company. Shareholder rights plans are regulated in all states, including New Hampshire. The rules for shareholder rights plans differ from state to state, and a company must ensure they are in compliance with the laws in the state where they are incorporated. Generally, shareholder rights plans are beneficial to the company and its shareholders. They help protect existing shareholders from significant losses if a hostile take-over attempt is made, and they also help to provide stability and consistency for both shareholders and the company. The adoption of a shareholder rights plan does not guarantee complete protection from hostile take-overs, but it can give shareholders an advantage when facing a hostile takeover attempt. However, it is important to always consult an attorney with experience in corporate law before adopting a shareholder rights plan in order to ensure all rules and regulations are followed properly.

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