April 01, 2004

Poison pills take a wide variety of forms, but today most are based on the class of security known as a right. Hence, the pill's official name, the "shareholder rights plan." A traditional right, such as a warrant, grants the holder the option to purchase new shares of stock of the issuing corporation. The modern poison pill adds two additional elements not found in traditional rights: "flip in" and "flip over" provisions.