The studio adopts a rights plan aimed at giving shareholders greater control over the company’s future.

Independent studio Lionsgate has adopted a shareholder rights plan in a bid to fend off investor Carl Ichan’s hostile bid to takeover the company.

Lionsgate said the plan aimed to specifically address circumstances in which current Canadian and US securities legislation that allows a shareholder to establish and increase a significant interest through a “creeping bid”.

The plan, which is expected to be widely supported by shareholders, intends to ensure that its board has sufficient time to explore and develop alternative options or for rival bids to emerge to maximise shareholder value if a formal tender offer is made.

It also encourages the acquisition of effective of control of the company through means of a “permitted bid” of one that treats shareholders fairly. A permitted bid would have to be supported by a majority of shareholders not including the bidder, and includes bids for less than all for the outstanding shares. Under the plan, one share purchase right will be issued and attached to each outstanding commons share of Lionsgate as of close of business on July 12.

If a stake of more than 38% of the outstanding common shares is built up by a bidder, each right held by other shareholder would entitle the holder to buy Lionsgate common share at a discount to their current market price.

The plan comes days after Icahn’s stake in the business increased to 33.9% after his $7 per share offer expired on June 30. This latest development means that a proxy fight could hand Icahn control of the company unless they can reach an agreement beforehand.

A successful proxy fight for Icahn would allow him to avoid paying a premium for ownership. Lionsgate has said that $7 a share does not constitute a control premium. The entrepreneur has said that if he loses the proxy fight, he will end his fight for control.

The rights plan strategy is also known as the “position pill” strategy because an unsolicited bid automatically floods the market with cut prices shares, making the stock look less attractive to the acquirer.