In listed companies, “poison pills” refer to different methods to discourage takeover bids. Takeover bids are attempts by a bidder to gain control of a target company, either by requiring voting representatives to be elected to the board of directors, or by acquiring a control block and using the associated votes to be elected to the board of directors. Once the bidder has control of the board of directors, it can manage the objective. As explained below, targets have several resistances to opaques and different types of defence have been called “poison pills” because they harm not only the bidder, but also the objective (or its shareholders). Currently, the most common type of defence of acquisitions is a shareholder law plan. Since the company`s board of directors is able to exchange or eliminate a standard poison pill, it does not generally exclude a proxy fight or any other acquisition attempt that is not accompanied by the acquisition of a significant block of shares of the company. However, it may prevent shareholders from entering into certain agreements that can help in the event of a proxy fight, such as. B an agreement to pay another shareholder`s fees. However, in combination with a staggered board of directors, a shareholder law plan can be a defence. [8] In particular, the increase in the adoption of the rights plan during this year has led to some agreement from shareholders. While influential voting advisory firms Institutional Shareholder Services Inc.

(“ISS”) and Glass, Lewis and Co. (“Glass Lewis”) generally oppose the adoption of rights plans that are not subject to shareholder vote, they have issued other guidelines on rights plans in the face of the covid-19 pandemic. Both seem more open to rights plans, which are relatively short. In April, the ISS stated: “A sharp drop in the price of the COVID 19 pandemic should, in most cases, be seen as a valid justification for adopting a plan lasting less than one year; However, boards of directors should provide detailed information on their length of time or decisions to delay or avoid shareholder voting plans beyond that period.” In the meantime, Glass Lewis stated that while it is still “generally opposed” to rights plans, valid reasons may include “closing a major merger, managing a clear and current hostile acquisition threat, or other contextual factors such as a sharp decline in share prices due to an industrial recession or a generalized market.” Threshold: This is the percentage of shares of a company that must be acquired to trigger a rights plan.