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    Drag Along, Tag Along Clause for Shareholder Agreement


    This drag along, tag along clause can be inserted into a shareholder agreement to govern how the sale of shares from a shareholder to an arm's length third party must be conducted.

    • The share purchase agreement must include an offer by the buyer to purchase a pro rata share of the other shareholders' shares on the same terms and at the same time.
    • The terms apply to arm's length transactions only. The clause contains a definition of which parties are not considered arm's length.

    A Drag Along, Tag Along Clause is an exit strategy that protects the rights of minority shareholders while at the same time giving majority shareholders a means to force other investors to exit at the same time.

    Download Type: Microsoft Word
    Last Updated: 19-February-2021
    SKU: 604