Corporate defense measures against hostile takeovers vary, but blank checking is also one of its defensive measures. It is a way to give authority to the director so that you can decide the contents of the stock immediately at the time of emergency that may be in the future. It is said to be a blank check (a white check with no entry of amount) because it will delegate the important matter of the company decision on the rights of the stock to the director. In addition, there are meanings such as disturbance and blocking in the word of check, so it is also thought that this is a hanging word. Hostile takeovers mean that hostile third parties will set up acquisitions for the company’s management team. However, there are certainly friendly contents for shareholders, customers, employees working at the company, even for hostile situations for management. In such a case, even in a hostile takeover, real is a friendly buyout. But even in such cases, the management team will consider defensive measures. And maybe they will start a blank check.
M & A method corresponding to blank check
Then, how does the acquiring side deal with it? For example, you can implement measures called Golden Parachute. The Golden Parachute is a method in which the amount of retirement bonus at the time of dismissal of those directors is set high, although the current directors on the acquired side are almost dismissed. The retirement bonus of directors is considered to be three years from the annual income of two years, but this amount is set high. That way, the management team may also respond to the acquisition without setting up a blank check. However, setting this amount too high can cause criticism from investors. Therefore, there seems to be a method of handling money as a so-called hand-over money rather than a retirement allowance. As an acquirer, we will proceed with paying attention so that it will not be a damaging M & A for our company while receiving professional advice as necessary.