Tag along rights (optional clause)

Tag along rights (optional clause)

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This document is a clause which can be inserted into a shareholders’ agreement.

It is common for shareholders’ agreements to provide that, where one shareholder is selling his or her shares in the company to a third party, other shareholders may elect to join the transaction and sell their shares to the third party as well, on substantially similar terms. This is referred to as a ‘tag-along’ right.

Using this precedent

This is a general clause which can be inserted into a shareholders’ agreement.

When inserting this optional clause into an agreement, care must be taken to ensure that the agreement remains consistent. Cross-references, definitions and schedules should all be checked.

This document has been authored for Lexis Nexis by Elise Margow, Principal, Legally Speaking.

This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.