Definition of Shark Repellant Defense
What is a Shark Repellant Defense
In a shark repellant defense, the board of directors will commonly institute measures to discourage the attempts by the acquirer to gain control of the target company. These provisions strengthen the board and make it much more difficult for the acquirer to execute its plan of replacing current directors.
Here are a few different measures that a target company could move forward on.
Staggered Board
A staggered board is when the election of directors is conducted over a multi-year period and only a limited number of directors will be elected at each annual meeting. This will lengthen the amount of time it would take for an acquirer to gain full control over the board.
Super-Majority Voting
With super-majority voting, a proposed action would require a higher number of shareholder votes than a simple majority. This will mean that the hostile acquirer must purchase or obtain a proxy from a larger number of shareholders in order to execute the acquisition.
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Related Investment Terms
Hostile Takeover
White Knight Defense
White Squire Defense
