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.

fair price amendment

An addition to a company's bylaws that prevents an acquiring firm or investor from offering different prices for the shares held by different stockholders during a takeover attempt. The amendment tends to discourage takeover attempts by making them more expensive. See also appraisal right.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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References in periodicals archive

Furthermore, a comparison of nonfair price and fair price amendments shows no significant differences from industry means for capital spending.

Antitakeover charter amendments are classified in four categories: (i) supermajority amendments, (ii) classified boards, (iii) authorization to issue preferred stock and (iv) fair price amendments. The first three amendment types are referred to as "non-fair" price amendments.

We examine fair price amendments and nonfair price amendments separately, because the categories may provide a different degree of job protection for managers.

Does antitakeover protection reduce myopic managerial investment behavior?

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