Tag-Along Rights
Also called: Tag Along · Co-Sale Rights
Tag-along rights let minority shareholders join a sale negotiated by majority shareholders, on the same terms and proportionally. They prevent a majority from exiting at a favourable price while leaving minorities holding shares under an unknown new owner.
In more detail
The protection is against a specific and realistic scenario: majority holders sell their stake, capture a control premium, and minorities are left as small shareholders in a company now controlled by someone they did not choose.
Well-drafted tag-along rights specify the notice minorities must receive, the window in which they can elect to participate, and confirmation that price and terms will match what the selling majority negotiated.
Together with drag-along rights, tag-along forms the standard pair of transfer protections in a shareholders agreement — one protecting the majority’s ability to exit, the other protecting the minority’s ability to come along.
What our lawyers check
- The trigger threshold and whether it captures realistic sale scenarios
- Whether minorities are guaranteed the same price and terms
- Notice requirements and the election window
- Whether the right applies proportionally or to the entire minority holding
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
All glossary terms