ANTIGREENMAIL PROVISION Meaning and
Definition
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An antigreenmail provision refers to a stipulation or clause found in corporate bylaws or a takeover defense mechanism that aims to safeguard the interests of shareholders from the practice of greenmail. Greenmail is a strategy employed by an individual or an entity to pressure a corporation into repurchasing its own shares at a premium price, incentivizing the shareholder to abandon takeover attempts or potential hostile actions.
The antigreenmail provision is designed to prevent this practice and protect the interests of all shareholders. It typically establishes specific measures and limitations on share buybacks that aim to discourage greenmailers from exploiting the company for personal gain at the expense of other shareholders. Under this provision, the corporation may set a minimum threshold for any shares repurchased, disallowing buybacks from individual shareholders or entities above a certain level.
Moreover, the antigreenmail provision often mandates that the repurchased shares must be offered to all shareholders equally, at a fair market value, and not at a premium price. This ensures that all shareholders are treated fairly and equally in any share repurchase transactions, discouraging greenmailers from targeting the company as an opportunity for a quick profit.
In summary, the antigreenmail provision serves as a protective mechanism within the bylaws of a corporation to counteract greenmail tactics, aiming to protect the interests and equality of all shareholders and prevent undue influence on the company's decision-making processes.
