Shareholder Rights Plans In Bermuda

Background

In recent years, the global markets (predominantly in the US) have experienced a significant surge in hostile takeovers, largely due to the COVID 19 pandemic, which impacted public companies' equity values and ultimately resulted in increased exposure to opportunistic acquisitions. However, more recently there has been a shift away from corporate raiders seeking outright control of a target, to hedge fund and private equity activists seeking to challenge corporate management.

In response to this surge, and regardless of the reason for the takeover, many companies now consider and implement defensive tactics. As you would expect, it can be quite difficult for directors to navigate their fiduciary duties when using such defensive mechanisms and this is something the board of the target will have to grapple with when considering any form of same (see below for further discussion on fiduciary duties).