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Simple English definitions for legal terms
porcupine provision
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A quick definition of porcupine provision:
Porcupine provision: A rule that a company makes to stop someone from taking over the company without the permission of the board of directors. It's like a shield that protects the company from being taken over by someone who wants to control it.
A more thorough explanation:
A porcupine provision is a clause in a corporation's charter or bylaws that is intended to prevent a takeover without the approval of the board of directors. This provision is designed to make the company less attractive to potential acquirers and to give the board more control over the company's future.
One example of a porcupine provision is a requirement that a certain percentage of shareholders must approve any takeover bid. For example, a company might require that at least 75% of shareholders must approve a takeover before it can go through. This makes it much more difficult for a potential acquirer to gain control of the company.
Another example of a porcupine provision is a requirement that the board of directors must approve any sale of the company's assets. This prevents a potential acquirer from buying up the company's assets piecemeal, which would make it easier to gain control of the company.
These examples illustrate how porcupine provisions can be used to protect a company from hostile takeovers. By making it more difficult for potential acquirers to gain control of the company, these provisions give the board of directors more control over the company's future.