Bank of Butterfield's shareholders yesterday finally swallowed a poisoned pill.

The term relates to a device which will provide shareholders protection in case of an unwelcome acquisition of 15 percent or more of the bank's shares.

One part of the process involves doubling the bank's authorised share capital from $30 million to $60 million.

Bank chairman James King told shareholders at yesterday's annual general meeting that no immediate possibility existed of the bank facing a hostile takeover, "but (New York investment bankers) Lehman Brothers had advised us that the best time to introduce such a defence is when nothing is on the horizon,'' he said.

In response to a question from a shareholder for clarification of the poison pill mechanism, bank secretary Peter Rodger explained what the new mechanism will mean.

"The Board, upon receiving notification that someone had acquired, or declared an interest to acquire, 15 percent or more of the bank's shares, we would have three choices,'' he said.

Two of those choices, he explained, would allow the board to dilute the bank's shares and, thereby, the potential acquirer's shares.

The first would be a rights issue, the second a bonus issue of new shares.

"The third choice, were the price being offered to be considered good, and to reflect the true potential of the shares' value, would be for the board to agree to the offer and to recommend its acceptance to our shareholders,'' he said.

Dr. King explained to the meeting that the poison pill is a protective contingency, the need for which has arisen, in part, as a response to legislative changes earlier this summer to transfer the responsibility for Bermuda's 60/40 shareholding restrictions from the House of Assembly to the Minister of Finance.

In his opening remarks, Dr. King, said that, in the opinion of management, the bank's "books of business are not seriously threatened'' by the initiatives of the Organisation for Economic Co-operation & Development, the European Union and other international bodies.

`Poison pill' plan approved But, with regard to the perception that offshore communities are being held to a higher standard than their onshore counterparts, Dr. King said: "The same standards should be in force offshore as well as onshore, since (the application of) more onerous restrictions would be unfair to us.'' Bermuda, Dr. King said, and notably its insurance sector, is perceived as a threat by "bodies in London, France and North America''.

This does not make Bermuda unworthy, he argued; on the contrary, Bermuda's businesses are highly reputable and effective.

Bank president and chief executive officer Calum Johnston briefly addressed the meeting, describing himself as "a lot happier this year than last'', a reference to the bank's return this year to an acceptable level of profitability under his stewardship.

"I am proud of the staff,'' said Mr. Johnston.

"I am told that bank staff have been heard bragging about our performance in certain night spots, and to that, I respond with an old saying: If you can do it, it ain't bragging.'' President and CEO Calum Johnston: `I'm happier this year than last' Chairman Dr. James King: `OECD initiatives ar not a threat to the bank.'