Define: Anti-Takeover Statute

Anti-takeover statutes are legal provisions enacted by states to protect corporations from hostile takeover attempts. These statutes grant boards of directors and management certain powers to defend against unwanted acquisition bids or attempts to gain control of the company. Anti-takeover measures can include staggered boards, poison pills, golden parachutes, and restrictions on stock purchases. The purpose of anti-takeover statutes is to provide boards with tools to evaluate acquisition offers and to protect shareholders’ interests. However, critics argue that such statutes can entrench management and hinder shareholder rights. The effectiveness and legality of anti-takeover statutes vary by jurisdiction.

A set of regulations in a state that will help to prevent or deter a company from attempting to initiate hostile takeovers. These regulations will tend to vary from state to state and they will typically affect only the companies that are incorporated in that particular state. Even though this statute is intended to restrict predatory takeovers, it will sometimes be determined to shareholders by preventing companies from partaking in profitable or justified takeovers.

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This glossary post was last updated: 29th March 2024.