Defensive Tools In Shareholder Activism: The "Voting Pill"

In today’s Financial Post, Barbara Shecter highlighted the use of modified shareholder rights plans (colloquially known as "poison pills") as an emerging defensive tool against opportunistic shareholder activism in Canada. Traditionally, poison pills are used by boards of target companies as defensive tools to guard against unsolicited takeover bids. By expanding the typical definition of "beneficial ownership" in a poison pill (which is typically limited to concepts of ownership and is used to determine whether the poison pill is triggered) by including securities that a shareholder does not own but has a right to vote or the right to direct the voting of, the poison pill could then be triggered where a group of shareholders intend to vote together even if they don't own shares or intend on making a takeover bid. In this context, the poison pill works to defend against predatory "wolf pack" shareholders who intend on using their collective voting power to seek control