Here’s what happened when TiVo’s Board adopted a Stock Transfer Restriction to preserve a $1.2Billion NOL

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When TiVo Corporation and Rovi Corporation merged last year the board of directors had a decision to make about $1.2 billion in federal NOLs.

So in April 2016, TiVo’s board adopted a Section 382 Rights plan – also referred to as a “NOL Poison Pill” – to prevent any person from acquiring more than 4.91% of its stock.

However, the plan expired upon the consummation of the Merger Transaction.

TiVo’s board went back to the drawing board and adopted certain stock transfer restrictions in Article X of its Charter.

TiVo Stock Transfer Restriction

Interestingly, the third and final restriction did not expire at the earlier of three years after the effective date of the Transfer Restrictions or the exhaustion of the NOLs, leaving the Board with the ability to determine the expiration.

This did not sit well with Institutional Shareholder Services, a proxy advisory firm.  On April 6, 2017 Institutional Shareholder Services issued a recommendation to TiVo’s stockholders that they should vote against the Stock Transfer Restrictions proposal.  Apparently, the Board listened and decided to change it.

TIVO - Amended Stock Transfer Restriction

On April 9, 2017, the Board announced in a press release, that it fixed the outside expiration date of the Stock Transfer Restrictions as the end of the “three-year period” (as that term is defined by IRC Section 382(i)(1) following the effective date of the Transfer Restrictions, and has determined that such date will not be extended without stockholder approval.

The Board clarified that this outside expiration date is September 7 2019 – which is three years from the September 7, 2016 effective date of the Stock Transfer Restrictions.

Shareholders will vote on this proposal tomorrow at TiVo’s Annual Meeting of Stockholders.

 

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