Las Vegas Business Attorneys & Lawyers

Poison Pill: What Is It?

A poison pill is a defense tactic companies use to deter or prevent hostile takeovers. These "shareholders rights plans" often threaten to dilute the price of stock enough to give the target company time to find alternative bids. It creates a cost that the purchasing company will have to pay after they've taken over. It also dilutes the value of the acquiring company's stock, to make taking over less appealing.

One company tries to wage a hostile takeover of another company by buying a large percentage of those shares. The company being taken over is called the target. The company or wealthy individual trying to take over is often called a corporate raider. The term poison pill does not refer to the target company harming their own interests. Instead, they're harming the corporate raider's interests.

Typically, corporate raiders try to increase a company's stock price when they acquire the company because

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Key Takeaways

• Capital stock refers to the total shares a corporation is authorized to issue, encompassing both common and preferred stock.
• It is distinct from outstanding shares, which represent what has actually been issued and purchased.
• Par value and additional paid-in capital are key accounting components used in calculating the book value of capital stock.
• Issuing capital stock helps corporations raise capital without incurring debt but may dilute ownership and control.
• Capital stock plays a role in corporate governance, ownership rights, and investor expectations, especially regarding dividends and liquidation.
• The types, rights, and issuance rules tied to capital stock are governed by a corporation’s charter and state corporate law.
• Shareholders can assert voting rights, income claims, and liquidation preferences depending on the stock class they own.

What is Capital Stock?

Capital stock

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Key Takeaways

• Delaware LLCs offer unique privacy protections, including the ability to form an anonymous LLC where member and manager identities are not publicly disclosed.
• The state’s business-friendly regulations and the ability to form LLCs without a physical office or in-state operations make it an attractive choice for businesses seeking privacy.
• Delaware LLCs are subject to pass-through taxation, meaning income is taxed at the member level, not at the entity level.
• By using a registered agent, Delaware LLCs can enhance anonymity and confidentiality, ensuring that no personal or business addresses are made public.

What Is a Delaware LLC?

A Delaware LLC, or limited liability company, is a type of business entity created by filing the Certificate of Formation with the Delaware Secretary of State. It creates a legal existence separate from its owners. Owne

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What Are Tag Along Rights?

Tag along rights or "co-sale rights" are legal agreements that guarantee minority stakeholders the right to sell their shares in the company at the same time and under the same conditions as the majority stakeholder. These rights are often used when companies are founded and capitalized because it protects investors and encourages them to buy the company's stock at an early stage. This is especially true for most angel investors, who won't even think of joining unless there are tag along rights.

Why Are Tag Along Rights Important?

Tag along rights protect minority stakeholders by giving them a certain amount of control over their own investments. If a principal stakeholder of the company liquidates its share, smaller investors won't get a bad deal. In simple words: If Investor A is selling their interest in the company, Investor B gets to sell their interest

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Key Takeaways

• Delaware offers unique legal, tax, and structural advantages that attract startups and major corporations alike.
• The state's Court of Chancery provides expert handling of corporate disputes without juries.
• Incorporating in Delaware is highly attractive to investors due to legal predictability and established governance structures.
• Delaware LLCs offer flexibility, asset protection, and privacy that make them appealing beyond just corporations.
• Disadvantages include dual registration requirements and associated costs for businesses operating outside Delaware.
• Delaware’s business infrastructure and incorporation speed make it particularly beneficial for startups seeking efficiency and scalability.
• UpCounsel can help connect you with qualified attorneys to evaluate if incorporating in Delaware is right for your business.

Why Incorporate in Delaware?

More than half a million businesses,

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