This excerpt taken from the COV 8-K filed Jun 8, 2007.
Unlike the Provisions of the Bye-Laws of Tyco International, Which Contain No Such Provisions, Certain Provisions of our Bye-Laws Could Have the Effect of Delaying, Deferring or Preventing a Change in Control
Certain provisions of our bye-laws could be considered "anti-takeover" provisions because they make it harder for a third-party to acquire us without the consent of our incumbent board of directors. The bye-laws of Tyco International do not contain comparable "anti-takeover" provisions. The provisions in our bye-laws, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions also are designed to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging those proposals because negotiation with such proponents could result in an improvement of their terms.
Board of Directors
Our bye-laws provide that shareholders may remove a director from office only for cause. In addition, our bye-laws provide that only our board of directors may change the size of the board or fill any vacancies that may occur from time to time except where a vacancy arises from the removal of a director for cause at a special general meeting of shareholders.
Our bye-laws provide that our board of directors shall call a special general meeting, in accordance with the provisions of Bermuda law, at the request of shareholders holding not less than 10% of our paid up voting capital (initially only our common shares). However, shareholders are not permitted to take action or pass resolutions by written consent.
Advance Notice of Director Nominations and Shareholder Proposals
Our bye-laws provide that with respect to an annual or special general meeting of shareholders, nominations of persons for election to the board of directors and the proposal of business to be considered by shareholders may be made only pursuant to our notice of meeting; by the board of directors; or by a shareholder who is entitled to vote at the meeting and who has complied with the advance notice procedures provided for in our bye-laws.
In order to comply with the advance notice procedures of our bye-laws, a shareholder must give written notice to our corporate secretary on a timely basis. To be timely for an annual general meeting, notice must be delivered, or mailed and received, at least 120 days in advance of the first anniversary of the date that we released the proxy statement for the preceding year's annual general meeting, subject to certain exceptions. To be timely for a special general meeting, notice must be delivered, or mailed and received, by the later of (1) 120 days in advance of the meeting and (2) the date that is 10 days after the date of the first public announcement of the date of the meeting. For nominations to the board, the notice must include all information about the director nominee that is required to be disclosed by SEC rules regarding the solicitation of proxies for the election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934 and such other information as Covidien may reasonably require to determine the eligibility of the proposed nominee. For other business that a shareholder proposes to bring before the meeting, the notice must include a brief description of the business, the reasons for proposing the business at the meeting and a discussion of any material interest of the shareholder in the business. Whether the notice relates to a nomination to the board of directors or to other business to be proposed at the meeting, the notice also must include information about the shareholder and the shareholder's holdings of our shares. With respect to special meetings of
shareholders, only the business brought before the special meeting in accordance with the bye-laws may be conducted at the meeting.
Board Authority to Issue "Blank Check" Preferred Shares and Rights
Our bye-laws authorize our board of directors, without shareholder approval, to issue up to 125,000,000 preferred shares in one or more classes or series and to fix the voting power and the designations, preferences, special rights, qualifications, limitations and restrictions of such class or series, including terms of redemption, dividend rights, rights upon dissolution of Covidien and conversion and exchange rights. Therefore, our board of directors is authorized to issue preferred shares with voting and conversion rights that could adversely affect the voting power of the holders of common shares, without shareholder approval. Our bye-laws also authorize our board of directors, without shareholder approval, to adopt a shareholder rights plan, which, depending on its terms, could have the effect of providing our shareholders with rights that would discourage a third party from pursuing an acquisition of a significant interest in our shares or from pursuing an unsolicited acquisition proposal or other potential change of control transaction.
Business Combinations with Interested Shareholders
Our bye-laws include a provision similar to Section 203 of the Delaware General Corporation Law, which generally prohibits us from engaging in a business combination with an interested shareholder for a period of three years following the date the person became an interested shareholder, unless, in general:
A "business combination" is generally defined as an amalgamation, asset or stock sale or other transaction resulting in a financial benefit to the interested shareholder. An "interested shareholder" is generally defined as a person who, together with affiliates and associates, owns or, within three years prior to the date in question, owned 15% or more of the outstanding voting shares of the Company.
Amendments to the Bye-Laws
Except in the case of the bye-law provisions described above, amendments to our bye-laws require the approval of the holders of a majority of the total number of votes of the issued shares present in person or represented by proxy and entitled to vote on the matter at a general meeting. Amendments to the bye-law provisions described above require the approval of the holders of 80% of the total votes of the issued shares.