Opt-Out Vote

AAA

DEFINITION of 'Opt-Out Vote'

A shareholder vote that is undertaken in order to determine if certain laws and regulations regarding corporate takeovers are to be waived during a particular corporate action. An opt-out vote, if successful, will remove certain legal restrictions that would have prevented a corporate takeover from occurring, or allow the takeover to occur sooner than it otherwise would have.

BREAKING DOWN 'Opt-Out Vote'

Although corporate-takeover laws vary from state to state, they are typically structured to provide limits on the ability of acquiring shareholders to exert too much influence on takeover targets. For example, regulations typically require corporate takeovers or extensions of tender offers to obtain a supermajority of shareholder votes in order to be approved.

These regulations can be waived, however, if the target company decides to opt out of the regulatory coverage. This is done through an opt-out vote, which, in most cases, must be approved by the corporation's board of directors before it is successfully implemented.

RELATED TERMS
  1. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  2. Acquisition

    A corporate action in which a company buys most, if not all, ...
  3. Proxy Vote

    A ballot cast by one person on behalf of another. One of the ...
  4. Corporate Action

    Any event that brings material change to a company and affects ...
  5. Voting Right

    The right of a stockholder to vote on matters of corporate policy ...
  6. Merger

    The combining of two or more companies, generally by offering ...
Related Articles
  1. Mutual Funds & ETFs

    Proxy Voting Gives Fund Shareholders A Say

    You have the right to take part in important company decisions - even if you cannot attend the meetings.
  2. Bonds & Fixed Income

    What Are Corporate Actions?

    Be a savvy investor - learn how corporate actions affect you as a shareholder.
  3. Stock Analysis

    5 Reasons Thoratec Corp. Keeps Impressing Investors

    Learn about Thoratec Corporation and its position in its industry. Understand five key factors why the company has impressed investors.
  4. Entrepreneurship

    Top 5 Startups That Emerged in Boston

    Learn why Boston is a hot market for startups, and familiarize yourself with a few of the top startups that have emerged from the city.
  5. Entrepreneurship

    How to Prep Your Business for a Sale

    Once you have a clean, stand-alone business with solid finances, it's time to put a price on it. Here are the steps needed to prepare for a sale.
  6. Stock Analysis

    This Is Why Instagram Is Winning Over Flickr

    Learn about Instagram's and Flickr's business models. Understand why Instagram has been winning over Flickr and why that trend is likely to continue.
  7. Professionals

    Career Advice: Management Consulting Vs. Investment Banking

    Compare the career opportunities available in management consulting and investment banking. Learn about salaries, skills needed and work-life balance.
  8. Stock Analysis

    Lockheed Martin to Buy Sikorsky. Is It the Right Move?

    Discover more information on the Lockheed Martin acquisition of Sikorsky, and learn why this move makes good strategic business sense for Lockheed.
  9. Stock Analysis

    4 Companies That Dominate Your Everyday Life

    Learn how companies such as Facebook, Google and Instagram dominate Americans' daily lives to the point their names have become verbs.
  10. Stock Analysis

    Comparing Coca-Cola and Pepsi's Business Models

    Understand more about the Coca-Cola company and the PepsiCo company. Learn about the key similarities and differences that make both companies successful.
RELATED FAQS
  1. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>
  2. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>
  3. What are some common accretive transactions?

    The term "accretive" is most often used in reference to mergers and acquisitions (M&A). It refers to a transaction that ... Read Full Answer >>
  4. Are companies with high Book Value Of Equity Per Share (BVPS) takeover targets?

    Companies with high book value of equity per share (BVPS) can be good takeover targets if those companies are public and ... Read Full Answer >>
  5. What are some ways to make a distribution channel more efficient?

    While there are many ways to make a distribution channel more efficient, the three high-level ways to increase the efficiency ... Read Full Answer >>
  6. If a company offers a buyback of its shares, how do I decide whether to accept the ...

    Tender offers for share buybacks are often made at a premium to the current market price; it may be in an investor’s best ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  2. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  3. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  4. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  5. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  6. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!