The NOL Poison Pill: Preserving Your Valuable Tax Assets
Overview
Poison pills, also commonly referred to as Shareholder Rights plans, were first
introduced in the early 1980s, in an environment of hostile takeovers. As a
defense against hostile bidders and leveraged buyouts, target companies would
implement poison pill plans to deter acquisitions by competitors and corporate
raiders. Rights plans achieved this by distributing rights to purchase additional
shares to the non‐offensive shareholders at a discount, effectively diluting the
hostile investor’s ownership percentage. These purchase rights would be
distributed once a triggering event had occurred, typically when an unwanted
investor had acquired a 15% to 20% ownership stake.