Director FAQ: Anti-Takeover Defenses

In brief: All public companies are potentially vulnerable to a change of control not approved by the board. While such events are relatively rare, they can become prevalent in a bear market (as in 2020). Uninvited change of control can occur either through a proxy contest or by a tender offer. Despite various rules limiting the powers of such tactics, they can succeed—unless the target company puts up an effective defense against them. This FAQ memo addresses the director’s fiduciary role concerning hostile takeovers and explains what directors can do to build a company’s anti-takeover defenses. 

This resource can help your board and committee members to

  • fulfill their fiduciary duties in relation to anti-takeover defenses,
  • understand judicial standards concerning such defenses,
  • consider instituting or removing poison pills or other defenses, and
  • follow recommended board practices for anti-takeover defense. 

Most relevant audiences: board and committee members and the CEO, chief financial officer, and general counsel