Partner Gardner Davis was quoted in an Agenda
article, “Boards Re-Think ‘Entrenchment’ Provisions
,” about how decades-old charter and bylaw provisions designed to thwart hostile takeovers may be opening up directors to more shareholders litigation.
Davis said companies enacted such provisions, which he called “shark repellents,” to make hostile takeovers more difficult to execute. But some state laws and court decisions have since restricted what companies can do to limit shareholders’ ability to remove directors.
“Best practice is to remove them, to get rid of any potential problem,” he said.