Drag-Along Rights

What are Drag-Along Rights?

Drag-along rights are a provision in a shareholder agreement that allows majority shareholders to compel minority shareholders to join in the sale of a company, under the same terms and conditions. This right ensures that potential buyers can acquire the entire company without minority shareholders obstructing the sale.

Key Aspects of Drag-Along Rights

• Majority Shareholder Control: Typically requires approval from a specific percentage of shareholders.
• Equal Terms: Minority shareholders must sell their shares under the same terms as the majority.
• Facilitates Company Sale: Helps streamline the sale process by avoiding holdout situations.

Related Terms and Concepts

Tag-along rights, shareholder agreement, minority shareholder, acquisition