Define: Antitakeover Statute

An antitakeover statute is a law enacted by a state to protect companies from hostile takeovers by imposing certain restrictions and requirements on acquiring companies.

Antitakeover statutes typically grant certain powers to the target company’s board of directors, such as the ability to issue new shares or adopt defensive measures, to deter or prevent hostile takeovers.

Antitakeover statutes can be effective in deterring hostile takeovers by making them more difficult and costly. However, their effectiveness may vary depending on the specific provisions of the statute and the circumstances of the takeover attempt.

Yes, antitakeover statutes can be challenged in court if they are believed to violate constitutional rights or other legal principles. Courts will review the statute’s provisions and consider their reasonableness and impact on shareholders’ rights.

No, not all states have antitakeover statutes. The availability and specific provisions of antitakeover statutes vary from state to state. Some states have more stringent statutes, while others have none at all.

In some cases, a company may be able to opt out of an antitakeover statute by including provisions in its articles of incorporation or bylaws. However, this may require shareholder approval and compliance with certain legal requirements.

Common provisions found in antitakeover statutes include restrictions on the ability of acquiring companies to vote on certain matters, limitations on the ability to acquire a controlling interest, and requirements for shareholder approval.

There is a potential for antitakeover statutes to be used to protect management’s interests rather than shareholders’ interests. However, courts generally require that the statutes be enacted for a legitimate corporate purpose and not solely to entrench management.

Antitakeover statutes can be overridden by federal laws or regulations if they conflict with federal securities laws or other federal regulations. In such cases, federal law will generally prevail.

No, antitakeover statutes are not the only means of protecting against hostile takeovers. Companies can also adopt other defensive measures, such as poison pills, staggered boards, or shareholder rights plans, to deter or prevent hostile takeovers.