Define: Structural Takeover Defence

A structural takeover defence refers to various strategies implemented by a company’s management to deter or prevent hostile takeovers. These strategies typically involve altering the company’s corporate structure or adopting certain provisions in its bylaws to make it less attractive or more difficult for potential acquirers to gain control.

Common examples of structural takeover defences include poison pills, staggered boards, dual-class share structures, golden parachutes, and supermajority voting requirements. These mechanisms are designed to either dilute the voting power of potential acquirers, make it harder for them to gain control, or impose significant costs on the acquiring party.

Yes, structural takeover defences are generally legal, as long as they comply with applicable corporate laws and regulations. However, their implementation and use may be subject to scrutiny by shareholders, regulatory authorities, and the courts to ensure they are not used to entrench management or unfairly disadvantage shareholders.

Shareholders can challenge the implementation of a structural takeover defence if they believe it is not in their best interests or if it violates their rights. They may file lawsuits alleging breaches of fiduciary duty by the company’s management or seek to remove directors who approved the defence mechanism.

Yes, a company can adopt multiple structural takeover defences simultaneously. In fact, some companies employ a combination of different defences to create a more robust deterrent against hostile takeovers. However, the effectiveness and legality of such defences will depend on the specific circumstances and applicable laws.

Yes, a structural takeover defence can be removed or modified. Shareholders have the power to vote on changes to a company’s bylaws or corporate structure, including the removal or modification of takeover defences. However, certain defences may require a higher threshold of shareholder approval or may have specific provisions governing their removal or modification.

While there are no specific legal restrictions on the use of structural takeover defences, they must be implemented in a manner consistent with the company’s fiduciary duties and applicable laws. Courts may scrutinize the use of defences that are deemed to be unfair, oppressive, or contrary to the best interests of shareholders.

In most cases, a company’s board of directors can adopt a structural takeover defence without shareholder approval. However, shareholders may have the ability to challenge the defence mechanism through legal action or by voting to remove directors who approved it.

No, structural takeover defences do not always succeed in deterring hostile takeovers. Determined acquirers may find ways to overcome or bypass these defences, such as through negotiation, proxy fights, or seeking support from other shareholders. Additionally, the effectiveness of defences can vary depending on the specific circumstances and the motivations of the acquirer.

Yes, there are alternatives to structural takeover defences. Companies can also employ other strategies, such as implementing strong corporate governance practices, maintaining good relationships with shareholders, engaging in proactive communication, and focusing on long-term value creation. These approaches can help build shareholder confidence and reduce the likelihood of hostile takeovers.