Activists know their legal rights. Before taking a position in a company an activist will have researched the relevant law and will be prepared to make use of every right available to it and even exaggerate its rights with a view to testing the knowledge and resolve of the target company. In our experience, companies are frequently much less well informed about the activist’s rights than the activist itself is. This may result in one of a variety of problems. For example:
- the company may become unduly fearful because it overestimates the powers of the activist;
- the company may be complacent because it ignores the rights of the activist; or
- the company may find itself caught out by not knowing how to respond to a demand of the activist in a pressure situation (e.g. a general meeting).