A competitor business (the main competitor) purchased a 15% stake of ordinary shares (with a bid to launching a takeover bid).

The Managing Director advised the Board of Directors of this event and recommended the Board consider measures to resist the takeover.

Steps which were taken:

Directors passed a resolution that the firm should issue 500,000 new shares to present Directors and a further 100,000 shares at a discounted price to current employees under a company share scheme.

Main reasons for these actions:

raise extra share capital for purposes of company growth

employee share scheme - to attract, retain and motivate employees

Following these moves the directors and employees will control 55% of the shares in the company and present the other company from making a successful takeover bid.