Porcupine Provision Law and Legal Definition
Porcupine provision is a clause in a corporation's charter or bylaws designed to prevent a takeover without the consent of the board of directors. Corporate charter amendments, frequently known as 'porcupine provisions' or 'shark repellents' are designed to make takeovers more difficult. For example, a target corporation can insulate its board by eliminating the right of shareholders to call special meetings or to remove directors without cause, or it can stagger the board members' terms and introduce cumulative voting so that a hostile bidder who has purchased fifty-one percent of the shares cannot replace the entire board in one annual meeting. The most popular of the pre-planned defenses, fair price amendments and poison pills, owe much of their popularity to the threat of front-end loaded, two-tiered tender offers.