Fair price provision

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Fair price provision

Fair Price Provision

A provision in the bylaws of some publicly-traded companies stating that a company seeking to acquire it must pay a fair price to targeted shareholders. The formula for determining a fair price may be indicated in the bylaws; it is often a calculation based on historic prices. Additionally, the fair price provision mandates that the acquiring company must pay all shareholders the same amount per share in multi-tiered shares. The fair price provision exists both to protect shareholders and to discourage hostile acquisitions by making them more expensive. See also: Antitakeover measure.
References in periodicals archive ?
The company's shareholders also approved an increase in the authorized capitalization of the company from 10 million shares of common stock to 50 million shares and 20 million shares of preferred stock, as well as fair price provisions in the event of a business combination with an interested shareholder.
During the takeover heyday, challenges centered around defensive mechanisms -- poison pills, classified boards, fair price provisions, and opt-outs of state takeover legislation.