Definition
A fair price provision is a corporate charter or bylaw provision requiring that, in any going-private or back-end transaction, all shareholders receive consideration at least equal to the highest price paid by the acquirer in any prior tender or open-market purchase.
Why it matters
Fair price provisions neutralize the structural pressure of two-tier offers by guaranteeing that holders who don’t tender into the front end won’t get squeezed at a lower back-end price. They make front-end-loaded coercive offers economically pointless.
Form
Often paired with a supermajority vote requirement (e.g., 80% approval) for any business combination with an “interested shareholder” — unless the fair-price floor is met.
Statutory analog
Many states (including Delaware via §203) have built fair-price-style protections into their general corporation law, reducing the need for charter-based provisions in those jurisdictions.