Affluence Corp (AFFUD)

[TJG]

Uh Uh... Ture they do use them for acquisitions but one of the keys is the Hostile Takeover and is often called the Poison Pill

Yes, increasing authorized shares is a key element of the "poison pill" defense, a widely used strategy by public companies to thwart hostile takeovers.
How it works

Poison Pill: A "poison pill", also known as a shareholder rights plan, is a defense mechanism that allows existing shareholders, excluding the hostile acquirer, to purchase additional shares at a significantly discounted price if an unwanted party surpasses a predetermined ownership threshold (e.g., 10-20% ownership).
Dilution: The discounted purchase of newly issued shares by existing shareholders effectively dilutes the hostile acquirer's ownership stake, making it more expensive and challenging to gain a controlling interest.
Deterrent: This makes the target company less attractive to the hostile acquirer, potentially deterring the takeover attempt or forcing them to negotiate with the board of directors.

Why it's effective
Dilutes Ownership: Increases the number of outstanding shares, making it more expensive and difficult for the acquirer to gain control.
Forces Negotiation: Deters hostile bidders from building an ownership position and pressure the board into negotiations.
Buys Time: Gives the target company's board of directors more time to evaluate the offer, negotiate, and potentially seek a "white knight" (a friendly acquirer).

Considerations
Shareholder Approval: Increasing authorized shares typically requires board approval and a vote by the shareholders, according to UpCounsel.
Dilution Risk: While it deters hostile takeovers, the issuance of additional shares can dilute the value of existing shares, which may negatively impact shareholder value if not managed carefully.
In essence, increasing authorized shares provides a company with a powerful tool to defend itself against unwanted takeover attempts by making it financially unattractive for the hostile bidder. However, careful consideration of the potential impacts on shareholder value and the necessity of shareholder approval are crucial when implementing this strategy.