Add tag in the Investment Agreement

Aug 6th, 2022
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  1. Begin by adding your Investment Agreement to DocHub. Also, you can import right from your cloud storage.
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How to add tag in the Investment Agreement

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investors in your business very fun topic to talk about because it means someone may be interested in giving you money just to own part of your business so that means theres an upside or at least some interest theres something fun to be talked about here its also very complicated and complex area sometimes it involves family members so theres a personality aspect relationship aspect and it always involves that or money so today were just going to talk about some of the factors wed highly recommend in a scenario you you get a lawyer involved uh to make sure that youre thinking this through thoroughly um there is a relationship here that needs to be nurtured but well talk you through some of the things you want to be aware of you may be in a situation where you dont think you need a lawyer and that case or cant afford one will help you along the best can even if youre going to go hire one heres some food for thought uh leading into that so you can have a really productive rel

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Tag-along rights also referred to as co-sale rights, are contractual obligations used to protect a minority shareholder, usually in a venture capital deal. If a majority shareholder sells his stake, it gives the minority shareholder the right to join the transaction and sell their minority stake in the company.
For example, if you own 10% of the companys shares and you have a tag along right, you would be given the opportunity to sell 10% of the total parcel of shares that are being sold. This type of clause would typically result in shareholders selling some of their shares, but none of them being able to sell all of them.
Drag-along rights and tag-along rights are important forms of investment realisation in a shareholders agreement. Drag-along rights favour the majority shareholder while tag-along rights are more beneficial to the minority shareholder.
ROFR focuses on controlling who can become a shareholder. Tag-Along Rights ensure minority shareholders can exit on similar terms as majority shareholders. Drag-Along Rights enable a cohesive sale process by aligning shareholder interests.
Financial tags let organizations track user-defined fields on accounting entries posted to the general ledger. Financial tags are an alternative to financial dimensions and should be used to track transaction-specific data, such as document numbers and even some master data.
When a majority shareholder sells their shares, a tag along right will entitle the minority shareholder to participate in the sale at the same time for the same price for the shares. The minority shareholder then tags along with the majority shareholders sale.
Rights of first refusal are often paired with co-sale rights (also known as tag-along rights). Co-sale rights give the holder the option to participate in the sale of the startupor any other liquidation eventon equal terms as the other parties involved.

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