Shareholders’ Agreement – Transfer of shares: Tag Along

We have been posting on the use of shareholders’ agreements and matters that can be addressed in those agreements.  This post will discuss tag along rights and how they can restrict an ability of a shareholder to transfer of shares in the corporation.

A tag along, or piggyback right, is triggered when a shareholder wants to sell their shares to a third party.  The selling shareholder typically notifies other shareholders of their desire to sell their shares, and if a tag along right is exercised, the third party purchaser must also purchase the other participants’ shares (they get to “tag along” for the deal) on the same terms and conditions as they originally offered the selling shareholder.

Basically, a tag along is like saying – “If you are leaving, I’m going with you!”

Thinking of putting a shareholders’ agreement in place for your company?  Contact us.

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This blog post is intended to provide general information and does not constitute legal advice. You should consult a lawyer for advice regarding your individual situation.

Every effort has been made to ensure the contents of the blog post were accurate as of the date it was written, however, the law can change and we cannot guarantee that the information remains accurate.  In addition, because the comments above are of a general nature, they may not apply for every situation.  If you have questions, please contact us and we would be happy to discuss your individual circumstances, and whether there have been any changes to the law that would affect the information presented.