General counsel need to make sure their companies are prepared to ward off hostile takeover bids. In 2010, there was an 80 percent increase in the number of acquisitions of U.S. publicly traded companies valued at more than $100 million compared with 2009, according to a Jan. 13 article on thePractical Law Company website. As the credit markets continue to loosen, many commentators believe the number of acquisitions will continue to increase. However, as has occurred in past periods of rising acquisition activity, companies also should expect hostile bidders.
A general counsel needs to review his company’s charter, bylaws and other corporate documents to ensure adequate protective measures are in place. Three takeover defenses to consider include creating poison pills, adjusting the director-election process and limitingshareholders’ right to call a special meeting.
Poison Pill
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