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 ?
By controlling two-tier offers, fair price amendments may reduce this pressure.
We examine fair price amendments and nonfair price amendments separately, because the categories may provide a different degree of job protection for managers.
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.