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.