Poison Pills in Canada and the United States
A poison pill, or shareholder rights plan, is a device implemented by a company’s board of directors in order to deter unsolicited or hostile acquisition proposals. The rights plan originated in the United States and was introduced in Canada in 1988 when Inco adopted its first rights plan. The introduction of poison pills in both countries was met with questions as to their legality. In the divergent approaches through which these questions were resolved in Canada and the United States (in particular Delaware), the rights plan and its effectiveness as a take-over defence have followed divergent paths. Read more.