Drag-along right

Drag-Along Right is a legal concept in corporate law. The right assures that if the majority shareholder sells his stake, minority holders are forced to join the deal. This right protects majority shareholders.^[1] A Drag Along right gives the investing shareholder the right to force the other investor(s) to exit should the investing shareholder exit, once again, usually on the same price and terms. Drag-along rights are fairly standard terms in a stock purchase agreement. Drag-along rights typically terminate upon an initial public offering.^[2]

See also

• Tag-Along right, the converse concept
• Pre-emption right
• Right of first refusal

References

External links

• Drag-along rights
• The Dark Side of Drag-Along/Tag-Along Rights

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