Anti-Greenmail Provision

An anti-greenmail provision is a clause which may be included in a company’s statutes. This clause forbids a company’s board of directors from paying a premium to buy back shares from a shareholder without offering the same premium to all shareholders.

The aim of anti-greenmail provisions is to prevent shareholders from threatening to disrupt a business if its directors do not pay a premium to buy back their shares.

In most cases, anti-greenmail provision clauses make allowances for buybacks which are approved by a majority of shareholders.

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