A Critical Analysis of USA’s Takeover Laws and Defenses: Special Focus on Poison Pills in an Indian Context

In an era where removing the steps from a ladder and landing directly at the peak is commonplace in the corporate world, to get there, corporations employ a variety of strategies, one of which is ‘takeover’. Every country has its own way to deal with a takeover as per their own rules and regulations. However, not all businesses are willing to give up control, so they employ a variety of strategies. When a raider targets a firm with the purpose of taking control, the takeover defences are utilised. Different sorts of defences are deployed in the United States to protect it from potential danger. The poison pill defence is the most common. In the Delaware company code, most companies are incorporated and follow Delaware rules to protect the board. It’s the only state where companies can employ poison pill techniques. Firms have the right to exclude raiders (who is also a shareholder) and give precedence to the existing shareholders while distributing extra shares. As a result of this issue, the raiders’ shareholding decreases, making the takeover more expensive and less appealing to raiders. This method has been utilised previously. It appears irrational in the Indian context since the board of directors has limited power and the company have more. Every decision is taken by it. India has seen a few cases of hostile takeover since 1991. Its occurrence is rare but not impossible. This paper examines various takeover laws that emerged in the USA and also whether or not this method will be feasible in India, as well as its potential implications.