Editing Shareholder rights plan (section)

===Constraints and legal status===
The legality of poison pills had been unclear when they were first put to use in the early 1980s. However, the [[Delaware Supreme Court]] upheld poison pills as a valid instrument of takeover defense in its 1985 decision in ''[[Moran v. Household International, Inc.]]''  However, many jurisdictions other than the U.S. have held the poison pill strategy as illegal, or place restraints on their use.

==== Canada ====
In Canada, almost all shareholder's rights plans are "chewable," meaning they contain a permitted bid concept such that a bidder who is willing to conform to the requirements of a permitted bid can acquire the company by take-over bid without triggering a flip-in event.  Shareholder rights plans in Canada are also weakened by the ability of a hostile acquirer to petition the provincial securities regulators to have the company's pill overturned.  Generally, the courts will overturn the pill to allow shareholders to decide whether they want to tender to a bid for the company.  However, the company may be allowed to maintain it for long enough to run an auction to see if a [[white knight (business)|white knight]] can be found. A notable Canadian case before the securities regulators in 2006 involved the poison pill of [[Falconbridge Ltd.]] which at the time was the subject of a friendly bid from [[Vale Inco|Inco]] and a hostile bid from [[Xstrata]] plc, which was a 20% shareholder of Falconbridge.  Xstrata applied to have Falconbridge's pill invalidated, citing among other things that the Falconbridge had had its pill in place without shareholder approval for more than nine months and that the pill stood in the way of Falconbridge shareholders accepting Xstrata's all-cash offer for Falconbridge shares. Despite similar facts with previous cases in which securities regulators had promptly taken down pills, the [[Ontario Securities Commission]] ruled that Falconbridge's pill could remain in place for a further limited period as it had the effect of sustaining the auction for Falconbridge by preventing Xstrata increasing its ownership and potentially obtaining a blocking position that would prevent other bidders from obtaining 100% of the shares.

==== United Kingdom ====
In the United Kingdom, poison pills are not allowed under the [[Takeover Panel]] rules. The rights of public shareholders are protected by the Panel on a case-by-case, principles-based regulatory regime. Raids have helped bidders win targets such as [[BAA Limited|BAA]] plc and [[AWG plc]] when other bidders were considering emerging at higher prices. If these companies had poison pills, they could have prevented the raids by threatening to dilute the positions of their hostile suitors if they exceeded the statutory levels (often 10% of the outstanding shares) in the rights plan. The [[London Stock Exchange]] itself is another example of a company that has seen significant stakebuilding by a hostile suitor, in this case the [[NASDAQ]]. The LSE's ultimate fate is currently up in the air, but NASDAQ's stake is sufficiently large that it is essentially impossible for a third party bidder to make a successful offer to acquire the LSE.

==== Europe ====
Takeover law is still evolving in continental Europe, as individual countries slowly fall in line with requirements mandated by the [[European Commission]]. Stakebuilding is commonplace in many continental takeover battles such as [[Scania AB]]. Formal poison pills are quite rare in continental Europe, but national governments hold [[golden shares]] in many "strategic" companies such as telecom monopolies and energy companies. Governments have also served as "poison pills" by threatening potential suitors with negative regulatory developments if they pursue the takeover. Examples of this include Spain's adoption of new rules for the ownership of energy companies after [[E.ON]] of Germany made a hostile bid for [[Endesa (Spain)|Endesa]] and France's threats to punish any potential acquiror of [[Groupe Danone]].