Freeseas Inc

Freeseas Inc [Nasdaq symbol FREE] has a pretty website. It's corporate governance does not look so appealing. Anybody bothered to read the company's F1 registration statement back in May 2005? It is stuffed full of so-called 'poison pills'. It reads as follows 'These [anti-takeover] provisions are intended to avoid costly takeover battles, lessen FreeSeas’ vulnerability to a hostile change of control and enhance the ability of its Board of Directors to maximize shareholder value in connection with any unsolicited offer to acquire FreeSeas' Please ! What book of corporate finance theory is that from?

Would you want to be a shareholder in a company in which:

1) 'The Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of FreeSeas or the removal of its management.'
2) 'Directors of FreeSeas serve staggered, three-year terms' presumably to prevent their removal in the event of a take-over.
3) 'The Board of Directors may only change the size of the Board by a vote of not less than 662/3% of the directors then in office. This provision makes it more difficult to increase the number of directors in an attempt to gain a majority of directors through the addition of more directors.'
4) 'any action required or permitted to be taken by the shareholders of FreeSeas must be done at an annual meeting or special meeting of shareholders or by the unanimous written consent of the shareholders. FreeSeas’ By-laws provide that only the Board of Directors, the Chairman or the President may call special meetings of shareholders'
5) 'The shareholders of FreeSeas can make, alter, amend or repeal By-laws of FreeSeas only upon the affirmative vote of 662/3% of the outstanding shares of capital stock entitled to vote generally in the election of directors'

Take-overs are an important tool to release shareholder value. Boards that actively seek to restrain shareholder rights don't get my vote as an investor.

See below for the full text from Freeseas inc:
http://phx.corporate-ir.net/phoenix.zhtml?c=182261&p=irol-SECText&TEXT=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS94bWwvZmlsaW5nLnhtbD9yZXBvPXRlbmsmaXBhZ2U9MzQ1OTAwNyZkb2M9MSZudW09ODI%3d