Can you have drag along and tag along rights?

What are your rights? The drag along clause requires the minor to sell their shares, while the tag along clause requires the majority shareholder to allow the minor to join in on a sale. Both clauses give to the minor the rights to receive the same price, terms and conditions as any other seller.

What is a drag along clause in a shareholders agreement?

A Standard Clause in many shareholder agreements including unanimous shareholder agreements (USAs), a drag-along provision gives majority shareholders wishing to sell all or a substantial portion of their shares in the corporation to an unrelated third party the right to force the remaining shareholders to also sell …

What’s the difference between tag along and drag along rights?

Put simply, Drag-Along Rights protect majority interests whereas Tag-Along Rights protect minority interests . Drag-Along Rights provisions control where a majority interest of owners desire to sell their interests, they can drag along the minority owners, forcing them to sell.

What is tag along drag along clause?

A tag along provision also called ‘co-sale right’ is a clause that allows minor shareholders to ‘tag along’ with a larger shareholder or group of shareholders if they find a buyer of their shares. A drag along provision is a clause that allows majority shareholders to force the minority shareholders to join in on a sale of their shares.

What is tag along drag along provision?

A drag along provision allows a majority shareholder to make a minority shareholder sell their shares. In contrast, a tag along provision allows minority shareholders to sell their shares for the same price, on the same terms and conditions as the majority shareholder, if the majority shareholder: is selling to a third party; and.

What is tag along provision?

tag along provision. Investment agreement provision that gives a stockholders (shareholders) the right to liquidate a part or all of his or her investment at the time the firm is raising additional capital. He or she is paid usually from the newly acquired funds. Also called tag along right or take along provision.