This Tag Along Clause is for use in Shareholders’ Agreements where one of the parties is a minority shareholder. It is designed to protect the position of the minority shareholder where the majority shareholder decides to sell a defined percentage of shares in the company.
Where the majority shareholder decides to sell his shares, this clause gives the minority shareholder the right to tag along with the sale, i.e. to sell his shares to the same purchaser on the same terms and conditions. This prevents a minority shareholder from being stranded with an outside investor and with little or no effective control over the company.
This Tag Along Clause is already included in the Shareholders’ Agreements: “Shareholder Agreement - Long - New Share Issue - Minority Shareholder Bias” and “Shareholder Agreement - Long - No Share Issue - Minority Shareholder Bias.”
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