Dead Hand Provision

DEFINITION of 'Dead Hand Provision'

A stipulation on a defense mechanism (or poison pill) used by companies in order to protect against a merger or takeover by another company. The dead hand provision prevents the removal of the poison pill, a strategy used to discourage a hostile takeover, even if shareholders of the target company favor the takeover.

BREAKING DOWN 'Dead Hand Provision'

A dead hand provision states that only the original directors who put the provision into place can dismantle the pill, so any new directors are prevented from interfering.

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RELATED FAQS
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  3. Why is a shareholder rights plan called a "poison pill?"

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