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poison pill

Poison pill is a term used in the investment world to describe a legal rule built into a company’s structure that effectively prevents it from being taken over. This could take the form of shares that have different voting rights or situations that trigger a change of ownership, or even clauses that trigger the issuance of vast numbers of new shares.

From the point of view of the company, they can look like a good idea as it could protect jobs. Often though these are the jobs are those of highly-paid managers not workers. protected from take-overs, the management can become lazy and complacent to the detriment of the company, its shareholders and its workers. Generally poison pills are a bad idea.

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