Change of Control
What is a Change of Control?
A change of control occurs when there is a significant shift in the ownership of a company, such as through a merger, acquisition, or transfer of a substantial number of shares. This event often triggers contractual clauses, regulatory requirements, or changes in company management. It is a critical factor in shareholder agreements, employee contracts, and business loans.
Common Triggers for Change of Control
- Mergers and Acquisitions: When one company acquires another or two companies merge.
- Sale of Majority Shares: When a significant portion of a company’s shares are sold to a new owner.
- Management Buyouts: When the management team acquires the company from its current owners.
Implications of Change of Control
- Contractual Clauses: May trigger changes in contracts, such as employee agreements or vendor contracts.
- Regulatory Compliance: Might require notification to regulatory authorities.
- Strategic Impact: Can influence company direction, strategy, or operations.
Related Terms and Concepts
Acquisition, merger, buyout, shareholder agreement.