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Simple English definitions for legal terms
shark repellent
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A quick definition of shark repellent:
Shark repellent is a way for a company to protect itself from being taken over by someone who wants to control it. It's like a special rule that the company makes to stop someone from buying a lot of its shares and taking over. This rule can be written in the company's rules or laws, and it's meant to keep the company safe from people who might want to take it over.
A more thorough explanation:
Shark repellent is a term used in business to describe a strategy or provision that a company puts in place to prevent a hostile takeover. This means that if another company tries to buy a controlling interest in the company, the shark repellent provision will make it difficult or impossible for them to do so.
One example of a shark repellent provision is a "poison pill." This is when a company issues a large number of new shares of stock, which dilutes the value of the existing shares. This makes it more expensive for the acquiring company to buy a controlling interest in the company.
Another example is a "golden parachute." This is when a company offers its top executives large payouts if the company is acquired and they lose their jobs. This makes it less attractive for the acquiring company to take over the company, as they will have to pay out large sums of money to the executives.
These examples illustrate how shark repellent provisions can make it difficult for another company to take over a company. By making it more expensive or less attractive to acquire a controlling interest, the company can protect itself from hostile takeovers.