Publications

March 5, 2010

Delaware Chancery Upholds 4.99% Poison Pill

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In the recent Selectica v. Versata decision, the Delaware Chancery Court reiterated well established law upholding garden-variety poison pills and applied those concepts to a different type of pill that carries a low trigger threshold of 4.99% designed to protect a company’s tax net operating loss carryforwards (NOLs). In validating the adoption of an NOL pill by the Selectica board and its actions in response to the intentional trigger of the pill by a competitor, Vice Chancellor Noble reminds us of the substantial latitude afforded boards of directors in responding to perceived threats to a company and its assets.