What are Tag-Along Rights?
Tag-along rights give minority shareholders the right to join, or “tag along,” if a majority shareholder sells their shares, ensuring they can exit on the same terms.
Tag-Along Rights Meaning
The tag-along rights meaning centres on protecting minority shareholders during a sale. To define tag-along rights in practice, if a majority holder receives an offer to sell their stake, minority shareholders can require the buyer to purchase their shares as well, and on identical terms. This prevents minority investors from being left behind with an unwanted new controlling shareholder or stuck in an illiquid position. A clear tag-along rights definition is essential in venture deals, as it balances negotiating power and promotes fair treatment in exit scenarios. Tag-along rights stand for equal opportunity, protection and transparency in share sales.
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