Anti-Greenmail Provision

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DEFINITION of 'Anti-Greenmail Provision'

A special clause located within a firm's corporate charter that acts as a deterrence against the board of directors passing a share buyback.

INVESTOPEDIA EXPLAINS 'Anti-Greenmail Provision'

This provision acts as a preventative measure, restraining managers from buying back company stock at significant premiums due to greenmail. A majority shareholder may be able to influence the board into purchasing shares at a significant premium, so the anti-greenmail provision requires that a majority of shareholders (excluding the majority shareholder) agree to the buyback.

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