Explanation:
Options A, C, and D are all possible and realistic actions that Quota Bank can take to discourage other companies from acquiring the bank.
However, going to court by filing a lawsuit might have little or no impact in light of the information given in the question. Takeover bids are legal procedures between a willing buyer and a willing seller. Legal proceedings would work only if the potential owners engage in outlawed activities in an attempt to pull off the acquisition.
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Q.7 Karsley Bank, located in Arizona, wishes to establish its footing in Delaware by acquiring Quota Bank. Employees and senior management of the latter do not want their business to be enjoined to that of the former in part because they feel their bank’s future is bright. In particular, the directors of Quota Bank fear that the new owners may opt to fire them in favor of new management located in Arizona. The directors decide to seek advice from a reputable investment bank on how to fend off the takeover. Assuming you were one of the advisory panel members, which of the following would likely not form part of your advice?
A
That Quota Bank adds to its charter a provision that if another company acquires one-third of the shares, other shareholders have the right to sell their shares to that company for a large premium over market prices
B
That Quota Bank should file a lawsuit to dispute the possible takeover
C
That Quota Bank adds to its charter a provision making it impossible for any new owners to terminate the contracts of existing directors
D
That Quota Bank grants its employees stock options that can be exercised in the event of a takeover
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