Raleigh Business Attorneys & Lawyers

Key Takeaways

• A poison pill is a shareholder rights plan designed to deter hostile takeovers by making acquisitions more expensive or unattractive.
• Variations include flip-in, flip-over, call plans, and alternatives such as poison puts, preferred stock plans, and golden handcuffs.
• While poison pills can protect companies, they may also dilute shareholder value and harm investor confidence.
• Courts, especially in Delaware, have shaped poison pill legality, with landmark cases affirming or restricting their use.
• Today, poison pills are less common among l

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Key Takeaways

• SPVs (Special Purpose Vehicles) are legal entities created to isolate risks for a parent company.
• Advantages of SPVs include asset protection, financial flexibility, and the ability to undertake high-risk transactions without jeopardizing the parent company.
• Disadvantages include regulatory concerns and potential conflicts with the parent company.
• Formation requires the parent company to transfer assets or securities to fund the SPV, ensuring third-party equity participation.
• Off-Balance-Sheet SPVs allow for greater flexibility and are used in high-risk situations.
• The Enron scandal is a cautionary tale of SPV misuse, leading to stricter regulations today.

What is a Special Purpose Vehicle?

A special purpose vehicle (SPV) is a subsidiary of a company which is protected from the parent company's financial risk. It is a legal entity created

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Key Takeaways

• Authorized shares represent the maximum number of shares a corporation can legally issue, as defined in its Articles of Incorporation.
• Issuing all authorized shares upfront can limit a company’s flexibility for future fundraising or equity compensation.
• Increasing the number of authorized shares requires formal amendments and shareholder approval.
• Not all authorized shares are issued immediately; some are reserved for strategic purposes like mergers, acquisitions, or stock options.
• There are tax, governance, and dilution considerations when setting or adjusting authorized share counts.
• Differences between authorized, issued, and outstanding shares can impact valuation, control, and reporting.

What are Authorized Shares?

Authorized shares are the number of stock shares a company may issue to investors or employees at the time they incorporate and stock shares that the company board of direct

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Key Takeaways

• A clawback clause allows employers, investors, or funds to reclaim compensation or equity already paid under certain conditions, protecting against misconduct or unmet obligations.
• These provisions are common in employment contracts, executive compensation agreements, and private equity or venture capital partnerships.
• For employees, clawback clauses often distinguish between “good leavers” and “bad leavers,” determining whether benefits like stock options are retained.
• For businesses and investors, clawbacks safeguard against fraud, poor performance, or early employee departures, and help maintain financial integrity.

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